What a year this has been! There has been no shortage of heart-pounding events and market surprises for 2016, and forex players seem to have rolled with the punches. Here are the industry developments over the past twelve months.
New Features on Trading Platforms
As one of the main tools of the trade, forex platforms gotta be able to adapt to the times by introducing or enhancing features for its clients. One of the updates MetaQuotes made on MT5 was its ‘Time and Sales’ feature, which gives clients information on buy and sell positions, trade execution times, execution prices and volumes. It can be viewed as a histogram to give users a bird’s eye view of market interest, similar to what Level II quotes illustrate.
Throughout the year, MetaQuotes also made improvements on its web platform that enables users to access their accounts through any browser, without installing additional software. Apart from making this option available to more and more brokers, it also added to its long list of technical indicators and languages offered.
Another feature implemented later in the year is the two-factor authentication on the MetaTrader web platform, which protects accounts from unauthorized access. This involves the use of one-time passwords (OTP) that are unique six-digit codes generated when the platform is launched to add an extra layer of security.
Better Risk Management
Remember when the SNB shocker wreaked havoc, not just for client accounts, but also for several brokers last year? Forex firms seem to have taken the risk management lessons to heart as they’ve made several adjustments ahead of the biggest market catalysts this year, namely the EU referendum and the U.S. elections.
Brokers adjusted margin requirements in order to prevent overleveraging and to restrict opening and closing positions days before and after the actual event. Some even increased margins in more than a couple of instances and implemented trading restrictions on GBP-denominated equity indices and commodities. Talk about being extra careful!
But all that proved that it was better to be safe than sorry, as the Brexit decision did a number on pound pairs and European assets. Institutional platforms reported that volumes tripled around the event while some retail brokers saw a surge in client signups then. Still, it looks like the industry emerged mostly unscathed afterwards and even managed to weather the GBP flash crash that took place a few months later.
Thanks to the lineup of market-moving events, forex metrics experienced a strong ebb and flow throughout the year. It was off to a strong start in January as traders seemed excited to price in their expectations for 2016, then leveled off before the Brexit theme dominated the headlines in June. Summer doldrums weighed on volatility and activity as usual then the action kicked into high gear again in September as central bank biases started to shift. This was followed by another solid performance in November, spurred by the market’s reaction to Trump’s victory and a continuation of the Brexit theme.
Several institutional platforms and brokers reported record-high levels of activity in June and November due to the speculative activity and a flurry of scalp trades during the EU referendum and U.S. elections. Multibank aggregator service FXSpotStream, which works with hotshot firms like Goldman Sachs and Morgan Stanley, thought it already saw its peak ADV at $20.8 billion in June but this was surpassed by November’s $22.3 billion ADV.
All in all, 2016 was also an eventful one for the industry itself which thrives on volatility. Got any industry updates you’d like to share for the year? What do you think lies ahead for 2017?
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