Online trading services provider FXCM Inc (NYSE:FXCM) today published the key findings of a study of the execution of its retail clients’ orders. The main purpose of the study was to compare quality of execution for FXCM Retail Client orders versus the Futures market and the Interbank market for FX.
The study covers the period from October 1, 2014 to August 31, 2015, and is based on the trade data of FXCM LLC clients on NDD forex execution.
Key Study Conclusions:
FXCM was equal to or better than the quoted futures price 90.83% of the time compared to the spot equivalent quoted futures prices on the CME leading to potential savings of $36,350,525 for FXCM clients.
- Better than the futures price: 86.47%;
- Equal to the futures price: 4.36%;
- Worse than the futures price: 9.17%.
FXCM was equal to or better than the quoted interbank market price 95.31% of the time compared to the spot equivalent quoted interbank market price leading to potential savings of $55,121,988 for FXCM clients.
- Better than the interbank price: 92.19%;
- Equal to the interbank price: 3.12%;
- Worse than the interbank price: 4.69%.
Drew Niv, FXCM’s CEO, says,
“We wanted to explain why FXCM’s liquidity providers provide better pricing on our retail trading platform for Retail Clients”.
“Our liquidity providers are only allowed to be price makers for our retail clients and not price takers,” Niv added. “Only our Retail Clients can take a price which protects the market maker from potentially being picked off by larger or faster predatory market takers, making them more comfortable and giving them the ability to make a market based on quality of price and liquidity rather than speed.”
Futures Market Comparison: FXCM equal to or better than the futures price 90.83% of the time.
- Estimated savings to FXCM LLC clients: $36,350,525
- Average savings per order: $2.04
- Number of orders included in the study: 17,855,552
- Round turn trading costs including the spread, commission, and any additional exchange and regulatory fees are up to 58% lower at FXCM compared to popular futures brokers.
- FXCM LLC represents less than 25% of company’s entire retail client base. Extrapolated out to the global audience, the potential savings would be greater than $145M.
- The futures market data includes only the following currency pairs/contracts: EUR/USD, GBP/USD, AUD/USD, NZD/USD, USD/CAD, USD/CHF, and USD/JPY.
Interbank Market Comparison: FXCM equal to or better than the interbank price 95.31% of the time.
- Estimated savings to FXCM LLC clients: $55,121,988;
- Average savings per order: $1.94;
- Number of orders included in the study: 28,378,957;
- Extrapolated out to the global audience, the potential savings would be greater than $220M.
- The interbank market data was based on the following “direct” currency pairs: EUR/USD, GBP/USD, AUD/USD, NZD/USD, USD/CAD, USD/CHF, and USD/JPY.
You can view the official announcement from FXCM by clicking here.
Or check out the study itself by clicking here.