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Screenshot of a breaking news alert e-mail from Q2 2017
Livevol Securities, the futures and options brokerage arm of North American trading platform provider Livevol Inc whose operations are based in Chicago and San Francisco, has resumed its attempts to gain membership status in the National Futures Association (NFA).
The company has reapplied for NFA membership in July 2014, following an earlier request from April 2014 to get a regulatory nod for an introducing broker status. The application comes several years after Livevol Securities made exactly the opposite move: in the autumn of 2010 the broker had given up on its pursuit to acquire an IB status by the NFA as well as stand alone NFA membership.
In the light of the latest steps by the company, it is most certainly interesting as to why the company is electing for NFA membership at all, and also what factors led to it doing so at this precise moment.
The answer to both questions may come from the most recent regulatory requirements in the United States. Towards the end of 2013, the Commodity Futures Trading Commission (CFTC) published proposals for a new rule that would require all IBs registered with the CFTC to register with the NFA too. As the rule has come into effect, Livevol is now simply complying with the demands of the US watchdogs. Moreover, from the website of the firm we see that it offers two types of accounts through Interactive Brokers – it may be the case that the Livevol Securities simply wants to make regulatory acceptable its status of an introducing broker to Interactive Brokers.
However, a couple of other facts should be mentioned. In May 2011, when Livevol first announced the launch of the trading unit, it labeled the new business as a “broker-dealer”. It currently offers proprietary technology – Livevol X platform, to traders with large portfolios. And this does not resemble to the usual humble ambitions of IBs. What we could see is that Livevol Securities may apply for a status exceeding that of an IB.
The broker will have a market niche to fight for, as just a few months ago Institutional Liquidity (ILQ) parted ways with the US futures market, after its accounts had been acquired by Advantage Futures. Moreover, Livevol Securities will not be the first software provider to launch a brokerage arm in the United States – in June this year we saw NinjaTrader do just that following the acquisition of Mirus Futures.
North America’s online trading sector harbors plenty of intense dynamics. While one may think that the market has become dominated by a handful of major players, it could be the case that a myriad of newcomers is just around the corner.