Despite a
second consecutive month of decline, retail investor Forex deposits in the US
continue to maintain long-term highs. A significant drop was observed only in
the case of Interactive Brokers, whose “total forex retail
obligation” in May fell by 24%.
Forex Deposits in the US
Still Close to $550 Million
According
to the latest data from the Commodity Futures Trading Commission (CFTC) for May
2024, the total value of FX deposits in the US amounted to $547,720,090,
slipping by 0.01% from the $547,759,474 reported a month earlier.
Although
this marks the second consecutive month of decline from the recent record level
of $549 million in March, the values, as shown in the chart below, remain at
multi-month highs.
Gain
Capital continues to lead in terms of deposit size, with its total forex retail
obligation reaching nearly $208 million, growing by 2% or $3.6 million. OANDA
ranked second, with an increase of 2.4% or nominally $4.4 million.
The
strongest percentage growth was recorded by Trading.com, adding 9.5%. However,
its total FX deposits are nominally the most modest, growing by just under
$200,000 to $2.2 million.
On the other hand, Interactive Brokers reported a very sharp decline, rarely seen in data
reported to the CFTC.
FX Deposits at Interactive
Brokers Sharply Down
The latest
data released by the US regulator shows that Interactive Brokers’ deposits
shrank by 23.5%, falling by over $8 million from $35.8 million reported in
April to $27.4 million reported in May.
The total
forex retail obligation for Interactive Brokers had been gradually declining
since September of last year and showed a stronger rebound in April. However,
it appears that in May, it returned to continuing its previous trend.
Regulatory Financial
Reporting for RFEDs and FCMs
The CFTC
mandates that Retail Foreign Exchange Dealers (RFEDs) and Futures Commission
Merchants (FCMs) provide monthly reports detailing their financial status.
These reports are required to cover critical financial indicators, including
adjusted net capital, client assets, and the total amount of retail forex
commitments. Retail forex commitments are defined as the total assets held on
behalf of clients by FCMs or RFEDs, adjusted for any gains or losses that may
have occurred.
The
requirement applies to all 62 registered RFEDs and FCMs, which includes
prominent firms such as Charles Schwab, Gain Capital, IG, Interactive Brokers,
OANDA, and Trading.com. These firms are required to make their financial
commitments publicly available.
A recent
analysis by Finance Magnates highlighted that FCMs are increasingly
investing in advanced front-end technologies. This investment aims to improve
operational efficiencies and strengthen their competitive position in the
highly competitive derivatives market.
This article was written by Damian Chmiel at www.financemagnates.com.
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