Retail volumes bounce back at FXCM; active traders drive up volumes at FXall

Margin foreign exchange broker FXCM has reported a bounce in retail foreign exchange trading volumes in January, reflecting improving market conditions and the results of its strategy for growth.

In a report released on February 12, the broker says retail foreign exchange trading volumes were up 22% to $363 billion in January, versus the same time last year. On an average daily basis, retail volumes were also up 22% year-on-year, reaching $16.5 billion in January 2013 – marking the second highest on record.

There was an average of 432,647 retail client trades a day in January 2013 – 25% higher than January 2012.

Volumes from institutional traders experienced a less pronounced improvement on a year-on-year basis, with customer trading volume up 6% to $116 billion in January 2013 versus January 2012. Average institutional trading volume per day of $5.3 billion in January 2013, was also 6% higher than January 2012.

The average number of trades was down 26% year-on-year to 15,878, suggesting trade sizes were larger during the reporting period.

Drew Niv, chief executive at FXCM in New York, says over the past two years, the broker invested in expanding its market footprint and revenue capacity during a period where muted market conditions placed significant constraints on growth.

"In 2013, we are starting to see the impact of those efforts, as trading activity grew in all our business segments amid improved market conditions," says Niv. "We continue to believe that our scale positions FXCM well, whether volatility continues to improve from recent historic lows or returns to levels we experienced last year."

On February 11, the company's share price closed up by 0.53% at $13.3.
The data follows on from record open interest in the yen at the CME, as investors positioned for the on-going trend for a weaker yen.

Similarly, multi-bank trading platform FXall reported a 31% jump in average daily trading volumes in January versus the same month last year. The volume represents trading on both its relationship-based trading system as well as its anonymous active trading platform.

Phil Weisberg, global head of foreign exchange at Thomson Reuters in New York, says the volumes represented a deeper liquidity in its active trading business, where it had seen record volumes on its order book globally.

However, comparable volumes on Thomson Reuters' broking systems – Thomson Reuters Dealing, Matching and Reuters Trading for FX – remained largely static. Average daily volumes were $126 billion versus $127 billion the same period the previous year.

Weisberg says increased volatility in the US dollar, sterling and euro around the fiscal cliff, positive non-farm payroll, UK/EU relations and risk of a triple-dip UK recession led to a rise in trading.

"Emerging market currencies performed well, remaining strong performers, with record months on matching for Hungary, Czech Republic, Poland and China," he adds.