Recent
financial market volatility didn’t do much to boost retail trader deposits in
the US, which declined for the second consecutive month. According to the
latest August data, the result was the worst since the beginning of the year,
dropping 5% from 2024 highs.
FX Deposits in US Shrink
by Another $15 Million
According
to the latest data from the Commodity Futures Trading Commission (CFTC) for
August 2024, the total value of FX deposits in the US amounted to $530.1
million, falling 2.8% from $545.5 million reported a month earlier. In nominal
terms, the decline was over $15 million, the strongest in 2024.
After
reaching local highs in June, the value of FX deposits in the US has been
shrinking for two consecutive months and is currently at its lowest since
January 2024, when it was just under $530 million.
The data
doesn’t align with the Cboe report from the same month, which showed forex
market activity remaining high, with volumes rising to $1.1 trillion.
Only Charles Schwab and
Interactive Brokers Reported Growth
Looking at
the distribution of volume declines among individual trading companies, only
Charles Schwab and Interactive Brokers reported positive changes. Charles
Schwab saw a 2.2% increase, while Interactive Brokers experienced a significant
12.5% growth, equivalent to $3.7 million.
On the
other hand, IG US recorded the strongest depreciation at nearly 15%, dropping
by $9 million to $33.7 million. OANDA also noted a substantial nominal loss of
almost $8.3 million. However, in percentage terms, it was significantly smaller
than IG US, at 4.5%.
Financial Reporting
Requirements for US Forex Brokers
The CFTC
plays a crucial role in ensuring the financial health and transparency of Forex
brokers operating in the United States. Retail Foreign Exchange Dealers (RFEDs)
and Futures Commission Merchants (FCMs) must submit detailed monthly financial
statements to the regulatory body.
These
reports are required to include essential financial metrics such as:
- Adjusted net capital
- Client assets
- Retail forex obligations
Retail
forex obligations represent the total assets held by FCMs or RFEDs on behalf of
their clients, accounting for any realized profits or losses. This requirement
applies to all 62 registered RFEDs and FCMs in the United States, including
well-known entities like Charles Schwab, Gain Capital, IG, Interactive Brokers,
OANDA, and Trading.com. These firms must publicly disclose their financial
commitments, promoting industry-wide transparency.
Recent
observations suggest that
FCMs are heavily investing in cutting-edge front-end technologies. This
strategic move aims to improve operational efficiency and strengthen its
competitive position in the dynamic derivatives market.
This article was written by Damian Chmiel at www.financemagnates.com.
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