Low volatility takes its toll.
In what is becoming a very up-and-down year volume-wise (see graph below), Retail Forex brokers saw another down month in April. LeapRate’s Retail FX Volume Index fell in April by more than 6% to $281 billion ADV, making April 2014 the slowest (non-December) month since November 2012.
Institutional brokers generally fared no better. ICAP’s EBS saw its slowest month in nine years in April. Both Thomson Reuters Matching and KCG Hotspot saw double digit percent declines. Only FXall had a flat month.
All the major retail forex brokers saw April volume declines in the mid-single digit / low double digit percentages.
Gerald Segal, LeapRate Managing Director, commented “There’s simply no substitute for volatility for retail Forex brokers. Without it, their clients pull back from trading. And with the benchmark EURUSD pair trading in a very tight 1.38-1.39 range for most of the month, many FX traders remained on the sidelines much of the month.”
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Sources: LeapRate research, monthly and quarterly volume reports of various Forex ECNs and Forex brokerage firms.
The LeapRate Retail FX Volume Index is a monthly measure of activity, stated in billions of dollars per day. It is calculated using proprietary formulas developed by LeapRate. The data input into the model are based on examining monthly and/or quarterly activity levels put out by various retail FX brokerage firms; similar activity levels announced by other FX aggregators such as Forex ECNs (e.g. Thomson Reuters, FXall, ICAP-EBS, KCG Hotspot) and FX settlement firms (e.g. CLS Group); as well as anecdotal evidence we encounter as part of our general research activities in the Forex sector.
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