CFTC every month publishes the total amount of liabilities of US Forex brokers towards their retail forex clients. Lately we've seen that Total Amount of Retail Forex Obligation of US traders grew by $3 million in November 2011, grew by $30 million in in October 2011 and dropped by $20 million in September. This is all normal business (and seasonal) fluctuation.
From December 2011 CFTC started publishing another interesting stat called Total Aggregate Retail Forex Assets. According to CFTC this the definition of both metrics:
Total Aggregate Retail Forex Assets: This represents the total amount of money, securities, and property held for retail forex customers in a retail forex account or accounts in compliance with Part 5 fo the Commodity Exchange Act.
Total Amount of Retail Forex Obligation: This represents the total amount of funds at an FCM, RFED, or FCMRFD that would be obtained by combining all money, securities and property deposited by a retail forex customer into a retail forex account or accounts, adjusted for the realized and unrealized net profit or loss.
Basically what CFTC is saying here is that the difference is between what was deposited and what is owned by the broker to clients, or if put in simple words: losses.
However this is not that simple. Apparently the way CFTC actually calculates this by looking into brokers' account, where they keep clients' cash, and comparing to deposits. However if the broker didn't withdrew realized profits (client losses) then this is accrued and distorts the eventual result. If the broker does reconciliate and withdraws on a daily basis then the difference then should be zero - just like found with several brokers in the table below.
Whatever the case is it is then not very clear what CFTC is trying to do here - we all know that clients lose, we see this very clearly in the profitability reports so why add this metric as well?
Looking at the table it is clear that FXCM, Gain, GFT, FX Sol and Tradestation (probably through IBFX) accrued massive losses of clients. FXDD however is the only broker that has positive clients balance.
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| Adjusted Net Capital | Total Aggregate Retail Forex Assets | Total Amount of Retail Forex Obligation | Difference | |
|---|---|---|---|---|
| ADM | 256,605,074 | 968,009 | 968,009 | 0 |
| ADVANCED MARKETS | 20,542,742 | 1,753,586 | 1,753,586 | 0 |
| ALPARI | 25,397,941 | 13,211,629 | 10,671,378 | -2,540,251 |
| FXCM | 31,243,101 | 208,489,756 | 144,703,279 | -63,786,477 |
| FOREX CLUB | 22,923,338 | 9,889,892 | 3,461,914 | -6,427,978 |
| FX SOLUTIONS | 41,409,111 | 61,447,531 | 17,524,164 | -43,923,367 |
| FXDD | 27,886,601 | 35,345,296 | 35,721,539 | 376,243 |
| GAIN CAPITAL | 35,700,900 | 157,059,925 | 102,599,438 | -54,460,487 |
| GFT | 79,672,867 | 130,876,900 | 88,475,168 | -42,401,732 |
| ILQ | 20,066,042 | 9,623,799 | 8,804,848 | -818,951 |
| MB TRADING | 25,101,763 | 35,241,268 | 32,808,570 | -2,432,698 |
| OANDA | 140,452,807 | 164,918,077 | 156,356,338 | -8,561,739 |
| PENSON | 143,384,895 | 30,231,575 | 30,231,575 | 0 |
| PFG | 33,644,888 | 43,923,054 | 31,786,635 | -12,136,419 |
| RJ OBRIEN ASSOCIATES | 201,729,011 | 5,520,479 | 2,971,072 | -2,549,407 |
| TRADESTATION | 25,235,604 | 100,719,798 | 71,531,907 | -29,187,891 |
| XPRESSTRADE | 22,972,452 | 1,462,758 | 1,444,758 | -18,000 |
| Totals | 1,010,683,332 | 741,814,178 | -268,869,154 |
When comparing November and December balances we see that the total number of retail forex obligations grew by $20 million but this only due to Penson which started reporting its forex obligations for the first time. Excluding Penson the amount dropped by $10 million. Tradestation and IBFX merger is reflected in Tradestation's December balance as IBFX was removed from the list.
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| November | December | |
|---|---|---|
| ADM | 388,210 | 968,009 |
| ADVANCED MARKETS | 1,712,860 | 1,753,586 |
| ALPARI | 11,395,016 | 10,671,378 |
| FXCM | 145,610,245 | 144,703,279 |
| FOREX CLUB | 10,050,563 | 3,461,914 |
| FX SOLUTIONS | 18,037,803 | 17,524,164 |
| FXDD | 33,439,892 | 35,721,539 |
| GAIN CAPITAL | 106,658,310 | 102,599,438 |
| GFT | 89,756,738 | 88,475,168 |
| ILQ | 8,671,301 | 8,804,848 |
| IBFX | 30,713,888 | |
| MB TRADING | 33,990,537 | 32,808,570 |
| OANDA | 153,547,893 | 156,356,338 |
| PENSON | 30,231,575 | |
| PFG | 33,065,159 | 31,786,635 |
| RJ OBRIEN ASSOCIATES | 2,963,082 | 2,971,072 |
| TRADESTATION | 41,216,375 | 71,531,907 |
| XPRESSTRADE | 840,943 | 1,444,758 |
| Totals | 722,058,815 | 741,814,178 |
