I wanted to take a moment to introduce myself. While I have been active on the forum, this sub-forum is dedicated to FXCM so you can post any questions about FXCM or the forex industry and I would be happy to help.
About me:
I am the FXCM Ambassador to online communities, so you will find me answering FXCM questions on forums, Twitter, etc… What does this mean? I can answer your questions about FXCM or forex trading in general. Depending on the type of question, I might respond publicly or privately. I cannot publicly discuss the details of any clients trading activity, so please privately message with regards to personal issues. For these types of issues, please request my email address to contact me privately.
Do you work for FXCM? Yes, I have been at FXCM for 5 years.
Do you have any background in Forex? I traded a personal account before working at FXCM and have a degree from Tulane in Finance.
What is your specialty? I helped pioneer the Metatrader 4 offering at FXCM.
Thanks for the question and I’ll share as many details as I’m able to.
If the leverage proposal is passed, we’ll continue allowing US traders to move over to FXCM UK. I know the question has been asked whether the CFTC will prohibit US traders from opening with overseas brokers. Here’s the response I received from our compliance department to try to get some clarification on it:
So from our standpoint, there’s nothing in place at the moment restricting traders from moving to FXCM UK. We did have a large number of traders move over to FXCM UK when the previous proposals went into effect for hedging and the FIFO rules, but those were seen by many traders as mere inconveniences. A change in leverage is going to be more substantial because it involves depositing 10 times more into the account to trade the same amount.
Are you considering leaving the US retail forex market altogether? Are you considering opening more offices abroad?
At the moment, no. But if 90% of traders go offshore, then it may come to a point where it’s no longer makes business sense to run a US operation with higher regulatory costs and reduced trading volume. I think the number of brokers will reduce even further if 10:1 leverage goes into effect.
The answer to your second question is Yes! We’ve been very busy opening new branch offices and affiliates. In the past couple of months, we’ve opened offices and affiliates in Athens, Greece (FXCMHellas.com); Milan, Italy (FXCM.it); Beirut, Lebanon (FXCMMena.com); Santiago, Chile (FXCMChile.com), and more to be announced. This adds to our current presence in London, New York, Sydney, Dubai, Paris, San Francisco, Dallas, Hong Kong, and Tokyo.
I imagine that the customer base for retail forex in the US would shrink dramatically if 10:1 leverage was to be enforced.
If 10 to 1 leverage were enforced, it would certainly raise the barriers to entry for US traders into the forex market. Of course, this is assuming the traders will actually setup with a US broker. FXCM, and many of the brokers in the FXDC, are making the argument that if the proposal passes many forex traders will simply go overseas where the CFTC and NFA have no oversight. The proposal hasn’t even passed yet, and we’ve seen an increase in the number of requests to move to FXCM UK.
Will the proposal pass? I think the number of comments submitted by traders (over 5,600 last time I counted!!) is creating pressure for the CFTC to re-think their position. The number of comments submitted is unprecedented if you compare to past years. And it’s also brought the issue to the attention of Congress if you read this article in EasyBourse.comHouse Lawmakers Concerned On CFTC Retail Forex Leverage Proposal
I imagine I’m asking about business secrets, but I’m curious so I ask anyway.
Feel free to ask anything, and I’ll share whatever information I’m able to. That’s what I’m here for
Sure, I’ll give an overview of the commission based accounts and how they compare to the regular standard 10k accounts.
To lay everything out, the majority of FXCM’s accounts include the trading cost in the spread. So there is a fixed pip mark-up on the spread. For example, if the spread being offered on GBP/USD by the bank is 1 pip, FXCM may mark-up the bid and ask prices by 1 pip so that you see a 3 pip spread on the platform. So FXCM’s compensation is built into the spread, and no additional commission is being charged. I can go into a more detailed explanation in another post of the spread variability and how it works with 10 banks quoting on No Dealing Desk execution.
It is possible to see the raw spreads and instead pay a commission if your account is setup through our Active Trader program. The Active Trader program is designed as an incentive program for high volume traders. The larger the volume you trade, the lower the commission you can pay so that your overall trading cost is lower. Our revenue on No Dealing Desk execution is correlated with volume. The more volume being transacted, the more pip mark-ups being payed off of the spread. So we’re willing to give reductions in trading costs if the total trading volume will make up for it. Sort of like the Wal-Mart philosophy. If you sell a huge amount of volume, you can give discounted prices because you’re making up for it by selling huge amounts of volume.
For example, on the Active Trader setup, instead of seeing a 3 pip spread on GBP/USD, you may see the 1 pip spread, and pay a $10 commission per 100k round turn trade so that the overall cost is 2 pips. This setup can be applied to any of our platforms whether you are using the FX Trading Station II, MT4, or the dedicated Active Trader Platform.
To request inclusion into the Active Trader program, your account balance needs to be at least $25,000 or your trading volume needs to be at least 10 million in notional volume per month. If you’re trading with a competitor and can show your trading volume meets the requirement or exceeds it, we can use it to determine a commission when starting the account.
Since the proposal was posted on the agency’s Web site in mid-January, the CFTC has received an avalanche of comments—more than 6,000 and counting—from individual traders and brokers. By comparison, the Securities and Exchange Commission last year received 4,000 comments to its proposal to restrict short selling.
And this was a good one (bold emphasis added by me):
He said the comments from the public—largely centering on the leverage proposal—have come down on the agency “like a winter blizzard,” noting that it was more than at any time in the agency’s history.
Don’t mind at all and thanks for posting in my thread. I can see this being a highly discussed topic so I’ve created a separate thread on No Dealing Desk execution if you don’t mind. Here’s the thread with your original question quoted 301 Moved Permanently .
A friendly reminder that this upcoming Monday, March 22nd, is the deadline for submitting comments to the CFTC regarding the 10:1 leverage. Over 8,000 comments have been submitted thus far!!
If you wish to submit your comments either for or against, you can do so by email. Instructions below compliment of Clint’s post from another thread.
In case your question has to do with the recent discussion on BabyPips about EA users having difficulty getting refunds from FRWC, I was contacted this morning by a trader on another forum alerting me to this and just read the thread on BabyPips.
I am monitoring the situation at the moment, and have notified the rep responsible for our relationship with the FRWC.
Exciting news today. FXCM announced the opening of its newest branch office in Berlin. FXCM Germany, an affiliate of FXCM LTD (UK), is co-regulated by BaFin and the FSA. We look forward to offering local service and support to our German clients!
This is the sixth new FXCM office opened since January 2009, following new offices in Paris, Sydney, Dubai, Milan and Santiago. FXCM has big plans in store for 2010, so stay tuned for more announcements…
FYI: FXCM’s trading hours Friday through Monday for the Easter Holiday period will remain the same. So trading closes on Friday April 2nd at 4:00pm EDT and will resume on Sunday April 4th at 5:15pm EDT.
Also, tomorrow is NFP. As if NFP were not volatile enough, tomorrow is also Good Friday, a public holiday in many countries. So liquidity could also be lower than normal causing more volatility.
