As I’ve mentioned in my previous blog entry on the surge in forex market volatility, the lazy summer days have come to an end and it’s about time for traders to get back in the grind. Aside from that, clearer monetary policy biases from major central banks are also paving the way for stronger forex trends. Are these translating to a pickup in industry metrics so far?
FXCM, one of the leading forex brokers in the United States, recently released its retail and institutional trading metrics for the month of August and reported some positive figures. For the retail sector, volumes picked up by a whopping 14% from July to $300 billion. Average daily retail trading volume is 25% higher on a monthly basis and is up by 2% compared to the same month last year. An average of 392,322 retail customers have been trading each day in August, 14% higher compared to July.
The institutional sector, on the other hand, saw a 2% monthly dip in trading volume for August. On an annualized basis though, institutional trading volume is still up by 22% at $257 billion. Average daily trading volume in this arena is at $12.2 billion, which is 7% higher compared to the previous month and 28% up from August 2013. An average of 35,387 institutional clients have been trading each day in August, down 22% from July.
In a nutshell, FXCM’s industry metrics indicated that the pickup in trading activity was mostly seen in the retail division while the institutional sector has lagged behind. While some industry analysts have seen this as a sign that retail traders are much more aggressive compared to institutional clients, it may be a little early to draw conclusions until other brokerages release their metrics.
Apart from that, FXCM’s figures may have been skewed by the firm’s acquisition of FXDD’s and Alpari’s U.S. retail accounts, as these forex companies transferred operations offshore and away from the heavily-regulated U.S. financial market. Moving forward, FXCM’s retail figures might continue to see strong gains as the company has also recently acquired IBFX’s U.S. and Australian retail accounts.
With that in mind, we’d have to wait and see how other large brokerages fared in the past month before assuming that the forex industry is back on its feet after a bit of a rough start this year. Do you think industry metrics are about to get better from here? Don’t be shy to share your thoughts in our comment box!