Saxo Bank improves its FX offering

Danish broker and investment specialist Saxo Bank has announced that it has made a number of improvements to Forex offering. These improvements are meant ‘to better accommodate the needs of its global client base’ and as you would expect these improvements are focused at those in emerging markets or regions where there is plenty of growth for the FX industry. 

The major addition to Saxo’s FX offering is the introduction of two new currency crosess or pairings, with the brokerage adding both the EUR/HRK and the USD/HRK to their trading platform. This makes them (as far as I know) the first retail brokerage to offer Croatian crosses, something which will certainly be attractive to traders based in Eastern Europe. The Croatian Kuna has become to get more attention since the country entered into the European Union on the 1^st of July 2013, while Croatia is obliged to join the Eurozone at some point in the future there will be plenty of speculation to occur regarding the future of Kuna.  

The broker also went onto announce that since the 2^nd of January 2014, the brokerage had halved the spread on the USD/THB to 25 pips. The move was in part inspired by the greater volatility of the currency which has led many in South East Asia to follow economic news out of the country with a great deal of attention. In addition Saxo have stated that there has been significant demand from their clients in the region to provide a competitive offering on the currency pairing with many local traders keen to get their hands dirty trading the exotic FX pairing.  

The moves made by Saxo Bank highlight how brokerages are increasingly looking to emerging markets to continue their growth. The provision of products which appeal to those based in these countries is surely likely to help brokerages like Saxo Bank develop a strong presence in these strategically important regions.

FBS joins Russian CRFIN

Russian Forex broker FBS has recently announced that it has been granted membership of Russia’s most prestigious self-regulating organization (SRO) CRFIN. The organisation aims to bring the provision of FX services into the Russian regulatory framework, which means CRFIN acts as a industry lobby in addition to its role outlining rules to its member brokers. Membership in the CRFIN self-regulating organisation is held by the vast majority of the country’s leading FX brokerages, who have been pushing for more regulatory recognition.

FBS has been around for over ten years now and is among the Russian brokerage firms who have been particularly active in bring FX services to Africa and South-East Asia. Without any serious domestic competition these brokerages were seen as providing a superior level of service, despite offering spreads which would be considered wide by some industry standards. FBS concentrated on expansion into South-East Asian markets in particular Indonesia, where they became known as an early entrant having created a number of localized products specifically for the Indonesian market.

Recently FBS and other firms have been having a much harder time in Indonesia and south-east Asia in general with local regulators clamping down on the operation of FX brokerages. This has led to some local regulators to clamp down or totally ban Forex trading. For instance, Malaysia’s Central Bank (MAS) issued a ban on foreign FX brokers, while India’s Reserve Bank has directed banks to prohibit credit transactions with Forex companies. Indonesia has taken things a step further by restricting access to a number of FXbrokerages and portals, which has created a strong negative bias against European firms despite the IP ban being possible to circumvent by using VPN’s and proxies. FBS decision to join CRFIN, will add a degree of credibility to the brand when operating in these South-East Asian territories. 

CRFIN pushes for Russian Regulation

The CRFIN has been the most vocal lobby group for creating a regulatory framework for the regulation of FX services in Russia. Despite the fact that Russia is a significant market in terms of volume up to this present time there has been no government regulation overseeing the provision of FX services. CRFIN has had some limited success in pushing the case for the government regulation of Foreign exchange services with the Minister of Finance recognizing the important role played by self-regulatory organizations and in addition to this the state Duma read a bill proposing a regulatory framework to govern the provision of FX services. Despite these minor successes Forex regulation in Russia looks some way off.

Investment Trends Report on the state of the UK derivatives market

Investment Trends, an Australian wealth management and research organisation has recently released a report about the current state of the UK derivatives market looking at CFD, Spread Betting and Forex trading. The study was based on a sample of over 13,000 British investors with data being collected during the months of August and September. 

Low Volatility During 2013 Suppressed Trading Volume

The study estimated that around 82,000 Brits had used financial Spread betting during the past year before September 2013. These figures show a net decrease of 8% on July 2012, when it was estimated that 92,000 British residents had engaged in financial spread betting during the past year. This meant that 2013 was the first year since 2009 when the size of the UK Spread betting market decreased in size, this was due to a decrease in the number of new traders while the amount dormant accounts remained the same.  

When it came to CFD trading there was an even greater contraction with the number of active CFD traders decreasing from 25,000 to around the 21,000 mark. Taking into account both Spread betting and CFD’s that means around 100,000 British individuals use derivatives to trade the financial markets, making the UK the biggest market place in the whole of Europe. 

When it came to FX trading there was a much more modest contraction with a decrease of only 3% in terms of the number of active traders. Meaning that in September 2013 there was around 71,000 people actively trading the Foreign exchange markets. It should be noted that currently in the UK, the vast majority of traders use Spread betting and CFD’s to speculate on the FX markets, however increasingly traders are turning to leveraged FX products.

The contraction in the number of traders using FX, Financial Spread Bets and CFD’s was blamed on the lack of market volatility and the consistent strong performance of the FTSE100 and FTSE250 saw many traders turn to traditional share trading. Equity heavy CFD firms came out the worst effected with brokerages leaning towards FX fairing much better.

IG Markets dominates the UK Markets

The report also found that IG Markets still dominates the UK market being the top FX/CFD and Financial Spread betting firm. According to the report IG Markets lost some market share when it came to FX and Spread betting, with the firm increasing its dominance in the provision of CFDs.

Both FXCM and Alpari saw some growth of their FX market share, the report also briefly mentioned that FXCM was gaining market share quickly in a number of other countries analyzed by Investment Trends. Interestingly Plus500 became a major player in the UK CFD market taking 5% of the countries market share which is quite impressive considering that the broker wasn’t featured at all in last year’s Investment Trends report.

The full results of the survey can be found below: 

Top 5 FX Providers	Market Share Jul' 12	Market Share Sept' 13
IG	32	29
FXCM	8	9
Alpari	6	8
ETX Capital	6	6
CMC Markets	4	4

Plus500 launches Litecoin

In recent weeks, many people have been talking about virtual currencies with Bitcoin recently reaching the heady heights of $1,000 per coin. The recent strong performance of Bitcoin has also got many in the FX industry interested in offering virtual currency products. Plus500 have been a pioneer when it comes to offering their customers virtual currency products, having launched a Bitcoin CFD product early this year. This made them the first brokerage to offer a Bitcoin product (Plus500 is a CFD service), and it wasn't long until other brokerages who offer CFD's got in on the act and begun to offer their clients Bitcoin CFD's. Following the lead of Plus500, well known retail Forex brokerage begun offering a Bitcoin CFD product on their platform. Those interested in learning more about Plus500 can do so here.

Now Plus500, has further ventured in the world of virtual currencies and has began offering a LiteCoin CFD product. Those not in the know, may be wondering what a LiteCoin is. LiteCoin is a virtual currency and a potential rival to Bitcoin, working in a similar way to the more established virtual currency. The main difference being the cryptology involved in mining LiteCoin is different and doesn't favor those with high computing devices in quite the same way, which means many people see LiteCoin as a more democratic virtual currency. Though exchanges using LiteCoin have struggled to survive with the worlds biggest LiteCoin exchange shutting down only a couple of months and ago, with it reaming to be seen whether there is much demand for LiteCoin trading products.

Plus500's experience with virtual currencies hasn't been plain sailing with the company having recently changed the conditions of its Bitcoin CFD product. Clients aren't allowed to roll positions overnight, with their being a fixed expiry date for every position entered into. These measures may have been in response to some of the difficulties involved in offering a Bitcoin CFD product, with their being no natural way to hedge Bitcoin positions brokerages are faced with a serious risk management problem. This has meant that spreads have typical been quite wide and that leverage has been rather limited, both helping brokerages limit their exposure to the volatility of these virtual currencies. By preventing clients from continually rolling over their positions the brokerage also helps limit their risk, which may be why both the Bitcoin and Litecoin CFD available at Plus500.

Has 4XP shut up shop for good?

Forex and CFD broker 4XP has been making the Forex headlines for all the wrong reasons, with numerous FX news outlets covering the recent woes of the brokerage. First off, Cyprus’s financial regulator CySEC issued a warning to investors stating that the firm wasn’t and never had been regulated by the body. Originally many interpreted this warning as pointing to the fact that 4XP had been cross promoted with other regulated CySEC brokerages who were using the same FX services firm. There has also been speculation that this warning was released due to the regulator having received complaints about the firm, with some forums suggesting that 4XP had not been paying out client withdrawal requests for some time.

The situation has preceded to get worse with it being known that the firm had cut ties with the Israeli based services firm which was responsible for customer support, marketing and other brokerage related services. The reason why 4XP severed its agreement with the FX services firm which provided all of the client facing services is not known, however customers 4XP have reported that they have been unable to get into contact with anyone from the brokerage. Which has understandably worried customers who are unsure whether they will be unable to get hold the cash that they had deposited with the firm. In response to this the pseudo-regulator the FMRCC announced that it would be revoking the licence of the firm.

Finally, 4XP sent an email to their customers stating that they would be unable to process withdrawals and deposits due to the BVI’s Financial Services Commission having put out a cease and desist regarding the firm. While it was true that the countries regulator had put out a cease and desist regarding the firms act ivies from the offshore territory of the British Virgin Islands, this notice specifically stated that the order would not prevent the firm from processing withdrawals. So to many this suggested that the brokerage had concluded that it was time to shut up shop and run off with depositors cash. This seems to have been confirmed by the fact that the brokerages website 4XP.com is down at the time of writing this article. If it is the case that the brokerage has opted to shut up shop, it provides individuals with a good warning to why they should never deposit with an unregulated brokerage.  

It does appear that 4XP has gone belly up and the firm has managed to disappear off with the clients assets. This isn’t the first time that firms have collapsed and disappeared only to leave their clients high and dry, 4XP’s sudden closure may become one of the larger straight out FX frauds which have occurred over the last couple of years. This really highlights the dangers of doing business with an unregulated brokerage, with proper financial regulation providing traders with some level of protection against such happenings.