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• In June 2015, there were 8 U.S. retail forex brokers, with market shares as follows:
FXCM - 34%
Gain Capital - 20%
Oanda - 19%
IBFX - 8%
Wedbush Securities - 8%
Interactive Brokers - 7%
MB Trading - 3%
RJ O’Brien - 0%
• By June 2016, the field had dwindled to 5 U.S. retail forex brokers, with market shares as follows:
FXCM - 34%
Oanda - 26%
Gain Capital - 25%
TD Ameritrade - 8%
Interactive Brokers - 7%
Not widely reported at the time, the days were numbered for TD Ameritrade and Interactive Brokers. Those two brokers are SEC-regulated broker-dealers (stock brokers), who also offered retail forex trading to their clients.
[B]On May 20, 2016, the SEC issued a ruling that said: effective July 31 SEC-regulated broker-dealers would no longer be permitted to offer retail forex products to their clients.[/B]
[I][B]LeapRate[/B][/I] picked up the story, and published AN ARTICLE on May 25, 2016.
At the time, I was unaware of this action by the SEC. And, as far as I know, there was no mention of it here in the forum until Jason Rogers, the FXCM rep, posted THIS on August 16.
The SEC action has forced TD Ameritrade and Interactive Brokers off the list of 5 brokers, above.
• [B]Now there are just 3 retail forex brokers licensed and regulated in the U.S.,[/B] with current market shares not yet reported:
FXCM -
Oanda -
Gain Capital -
If you are familiar with the monthly reports put out by the CFTC, titled [I]Selected FCM Financial Data,[/I] you know that various financial metrics are reported for Futures Commission Merchants (FCM’s) regulated by the CFTC. These firms are classified as follows.
FCM — commodity brokers (example: Advantage Futures LLC)
FCM-BD — commodity brokers who also deal in equities (example: Merrill Lynch)
FCM-RFD — retail forex exchange dealers (example: Gain Capital Group LLC)
FCM-SD — foreign exchange swaps dealers (example: RJ O’Brien Associates LLC)
Then, there are combinations of these designations, for example:
FCM-BD-SD — (example: JP Morgan Securities LLC)
FCM-RFD-SD — (example: FXCM)
(Note that these firms — the CFTC never refers to them as [I]brokers[/I] — all are referred to as FCM’s, which does not necessarily mean that they deal in futures; rather, it denotes that they are CFTC-regulated.)
The August 31, 2016, FCM Financial Data report (the most recent one issued) lists only 3 FCM-RFD firms (FXCM, Oanda, and Gain).
However, [I]Retail Forex Obligations[/I] (the far right-hand column of the table) are shown for 5 firms, including TD Ameritrade and Interactive Brokers, indicating that customers’ forex account balances at TD Ameritrade and Interactive Brokers had not yet been paid out, at the time that data for the August 31 report was compiled.
The September 30 report (which will be released in early November) is expected to show Retail Forex Obligations for only the 3 remaining U.S. retail forex brokers. Those figures will then be used to calculate the market shares of those 3 brokers.
At this time, we can guess that FXCM, Oanda, and Gain will each have about a third of the U.S. retail forex market.
We may never know how much cooperation, collusion, and/or coersion occurred between the CFTC and the SEC, resulting in the SEC ruling reported in the [I]LeapRate[/I] article, above. But, my guess is that these regulators work hand-in-hand with one another. It’s all part of a step-by-step campaign to destroy off-exchange retail forex trading, first in the U.S, and then if possible around the world.
The next-to-last paragraph in the [I]LeapRate[/I] article is chilling:
LeapRate spoke with a senior securities lawyer in the US who believes that this is likely just the first step by US regulators to possibly ban altogether highly leveraged retail forex trading. While the SEC might not have consulted with the futures and forex industry regulators (CFTC, NFA) in making its decision regarding the broker-dealers, those regulators will likely keep an eye on the SEC’s action – and it is not inconceivable that they could take similar action at some point in the future.
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