Hi there! Newbie here :o
I have few questions to ask…
- What is the size of FX Retail Market
- What is the market share per FX brokerage firm
- What is the average trading size of the average FX retail trader
Hope to hear from you guys…:o
The definitive source Bank for International Settlements
Look under statistics->forex where Triennial Central Bank Survey of Foreign Exchange and Derivatives Market Activity in 2007 – Final results
According to their statistic which they collect every 3 years, the forex ‘market’ grew from 1.9 trillion dollar ‘average’ daily in 2004 to 3 tillion dollars in 2007. This figure covers all the forex activities, but you can go in and see the breakdown on retail trades, which country, which currencies and so on. Very interesting read
thank you very much idealsmith and daydreamer 
misspipster and others,
I’m a little slow joining this discussion, because two of your questions (#2 and #3) sent me on a search for answers. I didn’t find answers to those questions, but I can give you some related information. More on that in a moment.
First, regarding your question #1, on the size of the forex market, here is some additional information to supplement what has already been offered by Ideasmiths.
Every three years, the Bank for International Settlements (BIS) gathers data, from the central banks of the world, on foreign currency exchanges occuring within their countries. These data are gathered in April, combined and analyzed over the summer and fall, and published in December as The Triennial Central Bank Survey. The most recent Survey reflects data gathered in April 2007, and published in December 2007 (PRIOR to the current economic meltdown), and shows the overall volume (turnover) of foreign exchange worldwide, as follows:
Total world SPOT FOREX transactions: 1,005 billion USD per day (this is the market we trade)
Total foreign exchange “forwards”: 362 billion USD per day (this is not spot forex)
Total foreign exchange “swaps”: 1,714 billion USD per day (this, also, is not spot forex)
Total Global Foreign Exchange Market Turnover: 3,210 billion USD per day (including adjustment for reporting gaps)
So, the SPOT FOREX MARKET, which we refer to simply as the “forex market”, is essentially a $1 trillion per day market, worldwide It is roughly one-third of the total $3.2 trillion per day world foreign exchange market.
“Spot forex” is a type of transaction, which may or may not be a “retail” transaction. Your question #1 was about the size of the retail market. The retail forex market is a fraction of the the $1 trillion per day spot forex market, but I haven’t yet determined how big a fraction.
It’s interesting to compare world spot forex volume to world stock exchange volume. The largest stock exchange, in terms of daily volume, is the NYSE Group, whose average daily domestic U.S. volume (between January and June of 2008 - PRIOR to the current economic crisis) was 136 billion USD per day. This represented 34% of daily world stock market volume.
The total daily volume of all the stock exchanges in the world (averaged over the period January-June 2008) was 403 billion USD per day. That’s roughly 0.4 trillion USD per day.
In other words, the spot forex market is two-and-a-half times the size of all the world’s stock markets combined. Listed below are the countries which account for most of that spot forex volume.
There are 15 countries whose forex trading volume is 1%, or more, of the $1 trillion per day total. Here they are, ranked according to volume:
Great Britain 34.1% of world forex volume
United States 16.6%
Switzerland 6.1%
Japan 6.0%
Singapore 5.8%
Hong Kong 4.4%
Australia 4.3%
France 3.0%
Germany 2.5%
Denmark 2.2%
Canada 1.5%
Russia 1.3%
Belgium 1.2%
Luxembourg 1.1%
Sweden 1.1%
Notice that China (0.2%), India (0.9%), New Zealand (0.3%), South Africa (0.3%), and several industrial countries in Europe do not appear on this list. The 15 countries on this list account for 91.2% of total world forex volume.
Three currency pairs account for more than 50% of all the forex trading volume in the world: EUR/USD (27%), USD/JPY (13%), and GBP/USD (12%). All other pairs trade single-digit percentages.
As for brokers’ shares of the spot forex market (your question #2), that information is known to the CFTC (and probably to the NFA, as well), but not shared with the public. And as for your question #3, regarding retail customers, I’m not sure whether you’re asking about average account size or average trade size; but, either way, I don’t think this information is made public. So far, I haven’t even found any estimates.
There is some interesting information published monthly by the CFTC, on the capitalization of Futures Commission Merchants (FCM’s), a classification which now includes (as of 2008) retail forex brokers. The CFTC’s report, titled Selected FCM Financial Data, lists commodity futures brokers, forex brokers, and certain futures clearing firms in one alphabetical listing, followed by several columns of financial data. If you want to compare the relative size of two brokers, you can simply compare the figures in the column headed Adjusted Net Capital. For example, FX Solutions has adjusted net capital of $43,785,065., and Alpari (US) has adjusted net capital of $19,690,941. In each case, these numbers represent the broker’s own funds AND the funds of all their customers, combined in one total. Unlike commodity futures brokers and stock brokers, forex brokers are NOT required to segregate customer funds. This should (and probably will) change in the future. In the meantime, there is no way to tell from the figures in this report how much customer money each broker has on deposit. It may be tempting to use the Adjusted Net Capital figure as an indicator of market share, but this could be very misleading.
I went through the CFTC’s alphabetical listing, and pulled out all the retail forex brokers I could identify. For what it’s worth, they are listed below in order, according to adjusted net capital. Notice that some of these brokers are not just forex brokers; some handle both futures and forex; some are also stocks and options dealers; and two of them (Citi Group and Deutsche Bank) are large commercial banks (and interbank participants), as well as being retail forex brokers. All of the FCM’s in the CFTC report are U.S. corporations or LLC’s, regulated by the CFTC and the NFA (or other industry self-regulatory body). Foreign-domiciled brokers, such as Saxo Bank (Danish), Dukascopy (Swiss) and ACM (Swiss), are regulated by government agencies in their own countries, and do not appear in the CFTC listing. Also, introducing brokers (IB’s) do not appear.
Here are the U.S. forex brokers currently listed as FCM’s by the CFTC, ranked according to Adjusted Net Capital, as of 1/31/09:
CITIGROUP GLOBAL MARKETS INC* - (CitiFX) - $ 7,149,522,573
DEUTSCHE BANK SECURITIES INC* - (dbFX) - $ 5,901,107,907
MF GLOBAL INC** - (MFG) - $ 657,659,591
INTERACTIVE BROKERS LLC* - $ 618,460,008
OANDA CORPORATION - $ 169,501,514
GAIN CAPITAL GROUP LLC - (Forex.com) - $ 107,390,780
FOREX CAPITAL MARKETS LLC - (FXCM) - $ 98,456,604
ROSENTHAL COLLINS GROUP LLC* - (RCG) - $ 86,237,076
GLOBAL FUTURES & FOREX LTD* - (GFT) - $ 76,055,556
FX SOLUTIONS LLC - (FXSol) - $ 43,785,065
INTERBANK FX LLC - (IBFX) - $ 39,945,958
CAPITAL MARKET SERVICES LLC - (CMS) - $ 29,255,080
PEREGRINE FINANCIAL GROUP INC* - (PFG-BEST) - $ 26,005,257
IG MARKETS INC* - $ 24,132,296
FOREX CLUB FINANCIAL COMPANY INC - $ 22,409,695
ADVANCED MARKETS LLC - $ 19,873,581
ALPARI (US) LLC - $ 19,690,941
ODL SECURITIES INC* - $ 19,572,976
IKON GLOBAL MARKETS INC* - $ 16,548,536
I TRADE FX LLC - $ 16,081,083
GFS FOREX & FUTURES INC - (GFS) - $ 15,957,382
EASY FOREX US LTD - $ 15,440,303
MB TRADING FUTURES INC* - (MBT) - $ 15,227,957
MG FINANCIAL LLC*** - (MG Forex) - $ 5,406,476
- denotes forex brokers engaged in one or more of the following: futures, options, equities and/or banking.
** MF Global handles spot forex transactions for institutional clients, but not for retail customers.
*** MG Financial is a wholly-owned subsidiary of Rosenthal Collins Group, whose capital supports MG Financial. Note that, by itself, MG Financial does not meet the current CFTC Net Capital Requirement of $15,000,000 for forex brokers.
This is the link to the February 2009 CFTC report from which these numbers were taken:
http://www.cftc.gov/stellent/groups/public/@financialdataforfcms/documents/file/fcmdata0109.pdf
This is the link to the December 2007 BIS Triennial Central Bank Survey, referred to at the top of this post:
I hope this information is helpful.
Clint
Thank you for obtaining this very interesting information Clint.
I am seeing that from your posts, you are becoming a very helpful poster on this forum!!
[B]Thank you for all your good posts.[/B]
Thank you, sir. Glad to be of help.