While the SNB event had major consequences for retail forex brokers, there were other long term trends that also contributed to the big changes in volumes at major brokers. CHF pair that followed SNB’s decision to remove the Euro peg of the Swiss Franc had different consequences for brokers. Some of them retail forex trading surgeshield the storm without a scratch while others lost millions of dollars.
Another big name that was affected is FXCM. 300 million in order to continue operating. The bailout from Leucadia was insufficient for FXCM to avoid its downfall as the company suffered irreparable damage to its reputation. Two years later, in February 2017, FXCM announced the sale of its US client base to Gain Capital and the withdrawal from the US market. Saxo Bank is also believed to have suffered up to 107 million in losses from the SNB move, but in the end it managed to survive the event without much damage thanks to its very strong stocks trading and CFD business. There are also clear winners from the SNB shock.
Brokers like IC Markets, Direct FX, Oanda, XM, Hot Forex or Forex. Direct FX was the first broker to pay the client’s debt caused by the event. Overall, what represented the demise of Alpari UK and FXCM was a huge opportunity for other brokers, who were proven to have better hedging and protection systems in place. The SNB shock has meant game over for Alpari UK and a huge drawback for majors FXCM and Saxo Bank. Francogeddon’ for FXCM and Saxo, and they can consider themselves lucky to still be operating. On the other side, XM, IC Markets, Gain Capital and Hot Forex have emerged as the new growth stories of the forex market. IC Markets, Direct FX, Oanda, XM.
Other industry trends that shaped the retail forex market in 2015 and 2016 The forex retail market is very dynamic as hundreds of brokers compete for clients around the world. Huge competition results in technological innovation and better service for the clients. Too little regulation is dangerous because it affects credibility and safety, while too much regulation can hinder business growth. James Robertsson, and he seems to be spot on if you look at how the forex industry developed. Tough regulation with high entry requirements and low maximum leverage has reduced competition in the United States and Japan, formerly known as the most important markets. With little competition from new entrants on their home markets, American and Japanese brokers had little incentive to innovate and adapt to global trends, and this can be seen in their very low market share in foreign markets.
European brokers and it is the hot spot for regulation in the European Union. Brokers under Cysec regulation are doing very well worldwide and seem to be able to grow their business at a very fast rate. Main features: Leverage, Spreads and Execution Leverage plays an important role in increasing the volumes of traders with less capital and it is in high demand in emerging markets like Africa and Asia. High leverage helps brokers attract more customers and allows them to lower the minimum deposit requirements. That’s why the fastest growing brokers in emerging markets are the ones offering higher leverage. It’s been widely speculated that high leverage increases risks and tougher regulation forcing a broker to limit leverage will result in the reduction of risk.