When opportunity comes a-knockin'

Research by client strategy firm ClientKnowledge, for example, indicates that profits from retail traders can be anywhere from $1 billion to $2 billion a year. The potential has led a number of banks to look into building up their coverage of this side of the market, outside of Deutsche Bank and ABN Amro who have already launched platforms.

It comes as no surprise then that more retail trading shops have been getting in touch with us. Some are even sending over financial data to show the strength of their company.

Unaudited highlights from FXCM Group's balance sheet, for example, include $120,660,927 in capital, and $98,657,018 in operating cash for the month ended January 2007. FXCM Group has total liabilities of $265,170,857, and $257,529,075 in customer cash.

The financial data FXCM Group sent said approximately $200 billion notional is traded a month over its platform FX Trading Station.

So it seems the increasing attention wholesale banks are paying to retail traders may be leading to nervousness among some retail aggregators. According to a source at a bank that is serving them as clients, a lot of aggregators and intermediaries he has spoken to are concerned that some of the banks are stepping into their territory.

But maybe that's misplaced, or premature, given the partnerships that go on. Online currency trading company Oanda, for example, said it could have a couple of announcements to make about white-label deals in the spring. Oanda is the company ABN Amro is working with on its retail multi-asset class trading platform marketindex.

However, in light of the closure of one platform – Profinum – at the beginning of the month, it seems there is a reliability edge that banks may have. This may explain why FXCM Group published its data. That way it can demonstrate it can look after clients when things go wrong.

On February 25 and part of February 26, for example, things did go wrong when technical problems meant FXCM clients could not trade. In an email to clients, it apologised and said all clients whose open positions suffered due to the technical failures related to the market opening on February 25 would be fully refunded the amount of any loss.

Saima Farooqi, Editor