I’m totally baffled by the July market-share figures published today by Finance Magnates for the four largest U.S. forex brokers. The Finance Magnates figures, which are ostensibly derived from the CFTC report released just this week, show a major loss of customer funds by the Big Four brokers – and a dire loss of funds by Interactive Brokers.
But, Finance Magnates’ figures do not match the CFTC’s data. – More on that in a minute.
Some background.
Each month, the CFTC receives self-reported financial data from futures and forex brokers. The CFTC then publishes a large table showing these data. The data reflect the financial positions of the U.S. futures and forex brokers as of the last day of a particular month, and are gathered by the brokers themselves. The brokers then report these data to the CFTC about 3 weeks later. The CFTC report comes out about 2 weeks after that.
So, the report released by the CFTC in the first week of September shows financial data as of July 31.
Each month, after the CFTC data are published, Finance Magnates (FM) excerpts some of the data, in order to calculate forex market share for the four largest brokers. (They omit IG Markets, because IG’s market share is tiny, compared to the Big Four.) FM then produces and publishes a table which excludes all the non-forex futures brokers, and excludes all the financial data which does not figure directly into their market-share calculations. The result is a table which is much more readable than the CFTC table from which the numbers were taken. The two tables (from FM and CFTC) have cross-referenced perfectly in the past.
This month, something went awry.
Finance Magnates’ numbers don’t match the CFTC’s numbers for any of the four brokers listed in their table. And the dire announcement made in their article (regarding Interactive Brokers) is based entirely on those mismatched numbers.
For each broker, the number in question is called “Total Amount of Retail Forex Obligation”, and it basically means the total of customer funds on deposit with that broker. Finance Magnates uses these figures to compare the four brokers, and to calculate what share of the overall market each broker has captured.
Here are the figures (omitting IG Markets) as reported by the CFTC and by Finance Magnates –
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Gain Capital (aka forex .com) – $242,863,609 (CFTC) – $246,972,815 (FM)
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Oanda – $224,699,902 (CFTC) – $190,369,407 (FM)
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Interactive Brokers – $93,008,016 (CFTC) – $33,931,048 (FM)
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TD Ameritrade – $59,416,200 (CFTC) – $66,653,714 (FM)
Total for four brokers – $619,987,727 (CFTC) – $537,926,984 (FM)
As I said, I’m baffled by the numbers reported by Finance Magnates.
The alarming drop in market share which FM reported for Interactive Brokers appears to be wildly wrong. FM said that IB shed more than $69 million in customer deposits in July, which represented a 67% decline in those funds. But, using the CFTC’s figures for July, I calculate that IB shed slightly more than $10 million, which represented a decline of slightly less than 10%.
I haven’t calculated correct month-on-month changes for the other three brokers.
Waiting for a corrected table from Finance Magnates.
– The CFTC accidently published July 2018 data, instead of July 2019 data. Then they corrected their mistake, and notified Finance Magnates of the correction.