Brokers Off To A Slow Start in Q3?

A few weeks back, I showed you some figures reflecting how brokers performed well during the second quarter. Profitability and account growth were positive for most of the top brokers in the past few months while central banks revealed that spot forex trading volume was up.

However, their good streak seems to have come to a halt for this quarter. A few brokers started printing bleak trading volumes for the month of July, hinting that the recent positive run might’ve been too good to last.

For instance, Danish investment bank Saxo Bank announced a 6.5% drop in trading volumes for July and an 18% decline in average daily volume ratio.

FXCM, which is one of the largest brokers in the industry, had mixed results. The firm recorded a 2% drop in retail customer trading volume and a 1% increase in institutional customer trading volume from June to July.

DMM Securities, a Japan-based broker and the world’s second largest retail broker by volume, also had a rough July. Its trading volumes for the month amounted to $958.5 billion, which is 10% lower than its record-high reading of $1.069 trillion from the month prior.

Meanwhile, Thomson Reuters, which is one of the largest trading platforms in the spot market, reported that average daily spot volume was at $114 billion. This is down 22% from the $147 billion figure for June.

Should we start to worry?

Don’t stress yourself out just yet. Remember that we have entered the summer months which, as we have seen in the past few years, is when trading activity is typically lower. This could be nothing more than just a seasonal trend.

Some analysts also cited the drop in trading activity among yen pairs as a reason for the lower figures. After all, the yen had such an action-packed six months in the beginning of the year, which sparked a lot of interest among investors. However, we didn’t see any of that in July.

But don’t worry! Looking ahead, with the focus now shifting to the U.S. as the Fed plans to start tapering asset purchases, volatility could soon pick up and entice investors to jump back in the forex market again.

That’s just my two cents. What do you think?