U.S. retail Forex assets unchanged in 2011

The CFTC released today the final 2011 numbers for regulated U.S. Forex dealers, and they show not much change overall in the cash U.S. retail traders hold at Forex brokerage firms – $742 million at the end of 2011 versus $743 million at Dec. 31, 2010, a drop of just 0.1%.

At the same time, trading volumes by U.S. retail traders have dropped significantly in 2011, by (we estimate) about 40%, following the introduction of lowered maximum leverage at U.S. regulated firms at the end of 2010. Gain Capital (Forex.com), for example, did about $70 billion-per-month in U.S. retail volume per month in 2010, but just $12 billion-per-month by Q3-2011 (more than made up for by Gain Capital through growth in Asia).

So why have client assets not dropped, while retail trading volumes have? The answer, we believe, is institutions. The client assets listed by the CFTC include (at least some) institutional-client assets, which have risen nicely during 2011 at leading U.S. firms such as FXCM and Gain Capital. However trading volumes, reported not by the CFTC but by the Forex firms themselves, are divided by the Forex firms into retail and institutional segments for reporting purposes.

The leading U.S. firms by assets remain unchanged from 2010 – Oanda, FXCM and Gain Capital. And there is one newcomer in the “top 5” – TradeStation, which pulled out of its White Label agreement with Gain Capital, acquired IBFX, and then itself was acquired by Japanese firm Monex.

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