The ever-changing retail Forex space has garnered a lot of attention in the past few weeks, headlined by FXCM’s eviction from the U.S. market. But they are not alone; the retail foreign exchange market has seen a steady decline in the number of US-based brokers, driven by the tight oversight of the NFA and CFTC.

The current regulatory landscape in the is making it difficult for US-based brokers to survive. The tough regulations now go beyond the most-notable Section 11 capital requirement, which requires all Forex Dealer Members to maintain an Adjusted Net Capital equal to or in excess of 20 Million USD; I’d go as far as to say just about every broker outside of the U.S. wouldn’t qualify for NFA regulation, even if there weren’t these hefty capital requirements. Some former NFA brokers still maintain strict guidelines and have systems in place that meet NFA requirements.

Whilst FXDD was never barred from the CFTC or the NFA we stand by our decision to leave our U.S business behind but we still maintain the highest regulatory discipline. In the world’s largest trading market regulators are making it virtually impossible for large scale Brokers such as FXDD, FXCM, Gain Capital and many more to operate under this strict regime.

Client safety and security is very important to us at FXDD. It is vital to understand and respect the motives of regulators looking to provide a safe and secure trading environment for traders. It is important that regulators have high standards for brokers; however, they must allow brokers to operate their businesses efficiently to ensure the brokers are equipped to provide an optimal – and safe – trading environment for their traders.

With recent headlines around the globe – whether Brexit, President Trump, or other – sparking volatility in the Forex market and increasing trading volume around the world, it’s imperative the brokers are held accountable by regulators, yet are equipped to provide a safe and secure trading platform for their traders.

Brokers and regulators aside, what does this increased volatility mean for the retail FX market? Will traders tighten up their stop losses? Will we see more hedging to protect against large market moves? The answer is yet to be seen. What is known is whether you’re a broker, market maker, technology provider, regulator, or trader; it’s an exciting time to be in the retail foreign exchange market.

Please contact me to discuss how to move your account to a broker that maintains the highest standards.

 

 

Lawrence Fayman
lfayman@fxdd.com