Retail FX volumes down 27% in April.
Leading retail FX firm FXCM, the world's largest online FX broker, announced both its Q1 financial results and its April trading volumes today. The stock market reacted by sending FXCM's stock on a wild ride -- initially diving by 12%, before recovering to be down just 2% for the day, to $10.40 per share.
What apparently spooked the market was not the Q1 results, but rather FXCM's April volume numbers, which saw retail FX volumes drop 27% (from March) to $248 billion, and its rapidly growing institutional volume back up 36%, down to $103 billion for the month.
FXCM is a very good proxy for overall global trading volumes in the online FX business. It is the only FX brokerage with significant volumes in the each of the world's three major markets -- Europe, the U.S. and Japan. Initial numbers we already reported on from Forex ECNs also point to a very slow April, due mainly to ultra-low volatility in the main currency pairs -- for example the EURUSD traded for most of the month in a very tight 1.31-1.32 range.
Our belief is that these slow volume numbers are not indicative of a long-term downward trend in the FX business, but rather simply a reaction by clients to a low volatility environment. Should volatility pick up (as it has somewhat in May), we would expect client activity levels at firms such as FXCM, and resultant volumes, to head back up fairly quickly.
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FXCM is a member of LeapRate's Approved List of global Forex firms.