Big stories came out this week for the forex industry while interesting developments from the FinTech world reached the headlines as well. Competitors took aim at Charles Schwab’s "Intelligent Portfolio" service, CWMFX was drawing fire from the British media over the police raid on Heron Tower and IronFX expanded its platform and trading product offering. At the same time, Forex Magnates came out with two initiatives to help make sense of the current Post-SNB situation.
FXCM Post SNB
After FXCM Inc (NYSE:FXCM) reported its earnings and trading volumes figures on Friday, the company’s CEO Drew Niv and CFO Robert Lande have taken to the earnings call. FXCM’s senior management revealed crucial details about the company’s future plans after the dramatic events of the 15th of January.
The main takeaway from the earnings call is that as expected, there will be a major restructuring of FXCM Inc’s (NYSE:FXCM) business in the coming months. The company’s CEO Drew Niv outlined that aside from selling its institutional businesses, which was already clearly communicated by the firm, it intends to part with its FXCM Japan and FXCM Hong Kong subsidiaries.
Laying the ground for the earnings call, FXCM published a second-by-second account of the “SNB Flash Crash.” The NYSE listed broker blamed institutional Liquidity providers for its failure, did not explain why CHF leverage was not lowered ahead of time and said it believes its technology performed adequately in client's best interests.
Charles Schwab Turns to Robots
Becoming the 800 pound gorilla in the sector, Charles Schwab officially launched their robo-advisory product on Monday, Schwab Intelligent Portfolios. Like Wealthfront and others, customers answer questions about their investment goals and risks, with assets allocated among 20 asset classes. The product also provides tax-loss harvesting to minimize tax burdens on account gains.
Among the most notable features is that Charles Schwab isn't charging advisory fees for the service. This compares to fees between 0.25% and 0.5% at other robo-advisory firms. Charles Schwab is able to do this as the firm offers its own ETFs that are publicly traded, which it collects a management fee from.
The launch has led to competitors going public with remarks that Charles Schwab’s product isn't as cheap as they state it is, and inferior to other robo-advisory offerings already on the market. Specifically, one of the chief criticisms is the product’s use of cash which, according to client documents, receives 6% to 30% of customer funds allocation. The caveat is that cash holdings are swept into Schwab Bank. As bank deposits, they become available for lending which Schwab earns revenues from.
Police Raid on Heron Tower
Various rumors and speculations are still circulating around last Thursday’s police raid at the Heron Tower at the heart of London’s financial district, resulting in 13 arrests. The company’s identity has not been announced, but the public profile of one Heron Tower tenant, namely CWMFX – the FCA regulated broker engaged in various sport partnerships, most notably with Chelsea F.C. – has drawn considerable attention.
London-based financial publication CityAM broke the news about the arrest of 10 men and three women in one of the tower’s firms offering financial services. The police have confirmed the report, stating that the firm’s employees were arrested for suspicion of false representation, conspiracy to defraud and money laundering. The company’s identity was not revealed, as a spokesman for the building refused to address issues regarding the tenants.
Speaking over the phone with Forex Magnates, Craig Dorse, managing director of CMWFX, said that “business is running as usual.” An additional written inquiry has not been answered, but shortly afterwards Dorse’s response was echoed in a company tweet: “CWM FX is operating as normal, merely an AML enquiry & had no correspondence to us.”
IronFX's New Offering
Diversifying its trading offerings, IronFX has announced the launch of IronFX Multi-Asset Trader. The new Trading Platform focuses on CFD trading, with over 3,000 instruments, including equities, stock indexes, commodities, bonds and interest rate products.
The new platform compares to its existing MetaTrader trading experience which focused on forex, as well as a limited batch of popular CFDs, such as gold, crude oil and popular global stocks.
Gaining more information about IronFX’s new CFD trading platform, Multi-Asset Trader, Forex Magnates connected with the broker to answer questions about what led to the launch and their current CFD business.
Shedding Light on the Post SNB Market
In a day that has become infamous with brokers and traders alike, January 15, 2015 saw the abrupt abandonment of the Swiss National Bank’s (SNB) currency peg, convulsing markets worldwide.
The latest report, “Extreme yet Foreseeable – The Swiss National Bank Crisis”, recounts the game-changing event providing both the context of the event and the full data of the market movements it stirred. No less important, the report delineates the post-SNB forex industry with an eye on future developments.
Additionally, Forex Magnates is inviting clients of now-defunct LQD Markets and Alpari UK to submit their pressing questions to us, to be answered by an insolvency litigation expert. Handling a broad range of restructuring and insolvency assignments on behalf of UK and international companies, David Leibowitz, partner at the international law firm Berwin Leighton Paisner LLP will be able to shed real light on some of the most pressing issues concerning clients, suppliers and debtors in regards to the insolvency process.
