Recent financial market volatility didn't do much to boost retail trader deposits in the US, which declined for the second consecutive month. According to the latest August data, the result was the worst since the beginning of the year, dropping 5% from 2024 highs.
FX Deposits in US Shrink by Another $15 Million
According to the latest data from the Commodity Futures Trading Commission (CFTC) for August 2024, the total value of FX deposits in the US amounted to $530.1 million, falling 2.8% from $545.5 million reported a month earlier. In nominal terms, the decline was over $15 million, the strongest in 2024.
After reaching local highs in June, the value of FX deposits in the US has been shrinking for two consecutive months and is currently at its lowest since January 2024, when it was just under $530 million.
The data doesn't align with the Cboe report from the same month, which showed forex market activity remaining high, with volumes rising to $1.1 trillion.
Only Charles Schwab and Interactive Brokers Reported Growth
Looking at the distribution of volume declines among individual trading companies, only Charles Schwab and Interactive Brokers reported positive changes. Charles Schwab saw a 2.2% increase, while Interactive Brokers experienced a significant 12.5% growth, equivalent to $3.7 million.
On the other hand, IG US recorded the strongest depreciation at nearly 15%, dropping by $9 million to $33.7 million. OANDA also noted a substantial nominal loss of almost $8.3 million. However, in percentage terms, it was significantly smaller than IG US, at 4.5%.
Financial Reporting Requirements for US Forex Brokers
The CFTC plays a crucial role in ensuring the financial health and transparency of Forex brokers operating in the United States. Retail Foreign Exchange Dealers (RFEDs) and Futures Commission Merchants (FCMs) must submit detailed monthly financial statements to the regulatory body.
These reports are required to include essential financial metrics such as:
- Adjusted net capital
- Client assets
- Retail forex obligations
Retail forex obligations represent the total assets held by FCMs or RFEDs on behalf of their clients, accounting for any realized profits or losses. This requirement applies to all 62 registered RFEDs and FCMs in the United States, including well-known entities like Charles Schwab, Gain Capital, IG, Interactive Brokers, OANDA, and Trading.com. These firms must publicly disclose their financial commitments, promoting industry-wide transparency.
Recent observations suggest that FCMs are heavily investing in cutting-edge front-end technologies. This strategic move aims to improve operational efficiency and strengthen their competitive position in the dynamic derivatives market.
