DeFInInG FOReX InDustRY
Te Forex industry didn’t exist when Forex rst started. Bankstraded currencies on behal o theircustomers and that was it. Nowthere are companies that specializein providing services to Forexcompanies, such as technical servicesas provided by companies such as FXSystem Hosting, who oers dedicatedservers and domain names specic toForex companies. Te Forex Industrycan be dened as the growing numbero companies oering Forex specic products and services, and service providers to those companies. Tere isnow a specic registration category inthe NFA called RFED, or RegisteredForeign Exchange Dealer
. Tis is anew category that didn’t exist 5 yearsago.
PRObLeM ObtaInInG Data
Since Forex data is available on asurvey & voluntary basis, data isdicult to analyze. For example, evenor the entire Forex market, ocialBIS data used commonly “4 rillion per day” is a mere survey. While mostaccept that it is accurate, the data isobtained by banks volunteering thisinormation to the survey, which isunaudited.Retail Forex is even harder to quantiy.Many brokers are private companiesor based oshore. As no reporting o nancial or customer data is required,it leaves researchers to only speculate.FXCM can provide a good modelbecause they are considered to bethe largest retail broker in the world,and as they are a public companythey submit customer and nancialdata. According to Google Finance,FXCM has 165,000 customers
.FXCM releases monthly metricso their trading volumes on theirInvestor Relations website.See their latest release:May 2011Retail rading Metrics:
o $328 billion in May 2011, 12%higher than April 2011 and 5%higher than May 2010.
per day o $14.9 billion inMay 2011, 7% higher than April2011 and no change rom May 2010.
client trades per day in May 2011,13% higher than April 2011 and 8%lower than May 2010.
o 155,592 as o May 31, 2011, a decrease o 2,410 or2% rom April 2011, and an increaseo 26,465 or 20% rom May 2010.
o 167,844 aso May 31, 2011, an increase o 1,696or 1% rom April 2011, andan increase o 6,635 or 4% rom May2010.Institutional rading Metrics:
o $80 billion in May 2011,28% higher than April 2011 and 4%higher than May 2010.
per day o $3.6 billion in May2011, 22% higher than April 2011and no change rom May 2010.
client trades per day in May 2011,28% higher than April 2011 and 95%higher than May 2010.More inormation, including historical results or each o the abovemetrics, can be ound on the investorrelations page o the Company’scorporate web site
Another phenomenon in Forex isthe prolieration o White Labeling
.Private Labels exist in all industries,however in Forex it is very common.Tere are a ew companies oering platorms and trading strategies,and 10x more who white label that product and market it as their own.For example, Citibank uses a whitelabel o Saxo Bank or their retailbusiness.
The Natinal FuturesAssciatin ecame thede-fact lal Frexreulatin mdel
FX TRADER MAGAZINE
July - September 2011