Category: News

As July 15 approaches, US Forex firms and foreign banks continue to scramble for solutions.

Saxo Bank and Citigroup announced yesterday that Saxo Bank will service all US clients through CitiFX Pro. This announcement comes amid a flurry of other similar notices, as firms doing business in the US prepare for the next phase in the implementation of the Dodd-Frank Act on July 16 – although since Friday July 15 is the last “business day” before July 16, the rules are now commonly being referred to as the “July 15 rules”.

Gibraltar based brokerage firm Investors Europe announced Friday the launch of its new retail-focused Forex business. Investors Europe has been around for nearly a decade doing mainly high-net-worth and institutional brokerage, billing itself as “Europe's largest independently owned offshore stockbroker” (hard to argue with that, with all those qualifiers!).

Things must be going well at Currensee, which decided to release some operating numbers for the period since it launched about eight months ago.

Some of the numbers include:

$6 billion traded since launch (8 months), or about $750 million per month, although on a run-rate basis that number is probably closer to $1.5 billion per month. $12 million in client assets in the program, with average account size of $25,000 – meaning that on a relative basis Currensee has attracted larger, sophisticated investors that the typical “retail” client.

As reported over the weekend in Zero Hedge, Gain Capital sent a message to clients late last week that as of July 15 US clients can no longer trade over-the-counter precious metals, including Gold and Silver. All open positions for US clients need to be closed as of the July 15 date.

China’s State Administration of Foreign Exchange (or “SAFE”), which sets foreign currency regulations in China, announced yesterday a series of new rules to take effect August 1 which indicate further easing of general Forex controls in China.

The US Commodity Futures Trading Commission (CFTC) decided today, in a 5-0 commissioners’ vote, to propose delaying implementation of certain Dodd-Frank Act swap rules scheduled to take effect on July 16 to (at least) the end of the year. The delay will allow more time for the regulators to finalize certain rules which are still a work-in-progress, such as defining which banks, hedge funds and other firms are to be defined as swap dealers.

IG Group reported results this morning for Q4-2011 (the company has a May 31 fiscal year end), and of course for its full year ended May 31/2011. Saw 2% overall revenue growth in Q4, steady if unspectacular. Home base in the UK actually saw a small revenue decline in Q4, £44 million this year versus £45 million in Q4-2010. Australia and non-UK-Europe businesses grew by double digits, offsetting falling Japanese revenues following the implementation of leverage restrictions in Japan. IG Group still does more than half of its business in the UK. Part of the reason for the slow Q4 (March thru May 2011) in the UK was attributed to the Royal Wedding, which effectively caused a week-and-a-half UK trading holiday. The markets reacted positively at first, with IG Group’s share price up 2% in early London trading, although they were basically flat toward the end of the day.

A couple of recent and similar moves by two US regulators, the FDIC (or Federal Deposit Insurance Corporation) and the OCC (or Office of the Comptroller of the Currency), went largely unnoticed in the Forex industry, and in our view were somewhat misinterpreted by those who did notice. However, these moves spoke volumes to us about future competition in the Forex business – in particular about the potential entry of several large US banks into the business.

FXCM’s share price soared on Friday by 11% following the release of information (as reported in Business Insider) that several large and influential hedge fund investors had accumulated significant positions in FXCM stock. The largest reported position was an approximate one million share holding in FXCM by Ken Griffin’s Citadel Investment Group, among the largest and most successful hedge funds in the world.