Regulation and consolidation in the US market - number of brokers offering retail forex trading plummets 50% in 4 years

Having seen two US brokers go public in the last 12 months and many more withdraw and being bought it's time to see what happened to US retail Forex Forex Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Read this Term industry sinc regulation became more stringent. Bottom line is that since Q3 2007 (4 years ago) number of US registered brokers offering retail Forex Trading Forex Trading Forex trading is the buying and selling of foreign currencies with the aim of generating a profit. The value of currencies, especially floating currencies, fluctuate to varying degrees. This constant volatility of exchange rates opens the door for speculators to invest in a certain currency against another. The Forex market is the world’s biggest and most liquid market, with over $5 billion turnover every single day, with the market being open 24 hours a day, 5 days a week.It goes without saying Forex trading is the buying and selling of foreign currencies with the aim of generating a profit. The value of currencies, especially floating currencies, fluctuate to varying degrees. This constant volatility of exchange rates opens the door for speculators to invest in a certain currency against another. The Forex market is the world’s biggest and most liquid market, with over $5 billion turnover every single day, with the market being open 24 hours a day, 5 days a week.It goes without saying Read this Term has dropped almost 50% from 32 registered brokers to 17 today. Taking into account the overall trend and adding personal knowledge on a situation of several US retail forex brokers we can also safely estimate that in the coming 6 months at least two more brokers will exit the US market. On the other hand brokers like optionsxpress may start offering retail forex trading - there's no estimate on the date though.

Added to the chart is the major regulatory decisions and requirements such as net capital increase over the years and the Dodd-Frank bill. It's interesting to note that the number of forex brokers is not immediately affected by these regulations but that it takes them time to digest the requirements and either exit or sell the client base.

Notes:

$ - first net capital requirement increase to $5 million

$$ - to $10 million

$$$ - to $15 million

$$$$ - to $20 million

* - FIFO (anti-hedging), leverage cap to maximum of 1:100

** - Dodd-Frank bill, RFED status requirements, max leverage 1:50

Up-to-date list of US brokers offering retail forex trading:

1. Interactive Brokers
2. MF Global
3. thinkorswim
4. FXCM
5. Gain
6. Alpari
7. Interbank FX
8. FX Club
9. FX Solutions
10. OANDA
11. MB Trading
12. GFT
13. FXDD
14. Advanced Markets
15. PFG
16. TradeStation
17. CitiFX Pro

Grab your latest copy of the Forex Magnates Retail Forex Industry Report for Q1 2011.