Leading Forex ECN ICAP reported its monthly numbers for December 2011 today, including its lowest spot Forex volume in more than six years, at $95.6 billion of average daily volume on its EBS platform.
It is unclear yet if this is part of an industry-wide fall in volumes, or just ICAP losing market share to smaller competitors such as Hotspot and Currenex. However, based on recent numbers put out by ICAP and others, it seems as though this is indeed indicative of an overall slowdown in Forex trading during Q4 (green bars above).
If so, this news could not come at a worse time for ICAP’s competitor FX Alliance (FXall), which is in process of trying to go public during Q1. FXall is apparently angling to price its IPO at a significant premium to the trading multiples of retail Forex firms FXCM and Gain Capital (which have both traded down significantly since going public in December 2010), which may be hard to do if its industry is experiencing a significant volume slowdown.