Is FXCM going head on to attract UK clients? Looks like it! With a new, smart act and partnership with Interactive Brokers, perhaps this is a rival for Hargreaves Lansdown’s products. We take a very detailed and opinionated look
The past five years have not been kind to what used to be the largest retail FX brokerage in the world.
After a series of clashes with the authorities that had been very cleverly diverted by astute senior management at the company’s New York global headquarters, the men with briefcases entered the 55 Water Street premises on that fateful day in 2015 when the Swiss National Bank removed the peg on the EURCHF pair without notice, causing unprecedented volatility which claimed the future of many agency brokerages.
This was the NFA’s cue to try to shut the company down, and it tried to do so very quickly, however Drew Niv, one of the most quick thinking executives in this industry worldwide, came up with an improvised yet ingenious plan to save his firm, without any ruffling of feathers.
For this reason, we nominated him the FinanceFeeds FX Industry Figure of 2016.
It is quite possible that Mr Niv’s incredible approach angered the thwarted authorities, and as a result they would have to find another means of downing the company, and they did.
Just a short while later, the NFA banned FXCM and Mr Niv from operating in the United States, which subsequently decimated the company, ruined its share prices, caused it to be deindexed from the New York Stock Exchange and for an entire ground-up restructure to take place, including the sell off of non-essential assets, one of which was the extremely effective and well respected FastMatch ECN which now belongs to transcontinental listed derivatives giant Euronext.
With all of this as a somwhat odious backdrop, especially considering that the company was banned from its home market on the rather dubious accusation by the NFA that it had been trading against its clients via a market maker and then reporting publicly that it was processing trades directly to its liquidity provider over a period of several years, something that has yet to be fully proven, FXCM faded into the background, concentrated on its extremely well organized and dominant Chinese operations, and went somewhat quiet.
Mr Niv has made a few very interesting public comments recently, some of which myself and other esteemed FX industry executives have got involved in, however it has not been until now that the company has really gone toward attracting retail trading attention in key markets where proprietary trading infrastructure is important to retail clients, such as the United Kingdom.
During the course of this week, FXCM has been placing the perspectives and opinions of its senior executives on the main pages of mainstream media in the UK, clearly demonstrating its wish to make a clean and swift comeback.
A few years ago, FinanceFeeds spoke to the company’s marketing division in New York, and the general perception was that the company cannot hide forever and must leave these two high profile events behind and move forward.
Yes indeed it must.
Today, as per most of this week, FXCM’s UK viewpoint is there for all to see.
Today, the company heralds its newly released commission-free stock trading offer, saying that this begins a new era for traders in the United Kingdom, with UK-based senior executive Brendan Callan now waxing lyrical on how new products are needed to cater toward an increasingly sophsiticated audience.
“As we enter a new decade, the trading landscape for retail traders is set to enter a new era. Costs have reduced so substantially that the idea of ‘free’ trading is now entering the mainstream” said Mr Callan.
“While this marks a welcome change from the days when the cost of a single trade was in the double digits, these new models are not as simple or transparent as it may seem” he said.
Alongside giving some very good advice to retail traders on what to look for when choosing a broker, Mr Callan explained that FXCM has decided to work with one of the giants of the equity trading world – Interactive Brokers – and utilise their best-in-class technology to launch FXCM Stocks.
“Interactive Brokers is a global market leader in the global trading and equities market and has been for several decades. The combination of our joint expertise, market knowledge and technology gives us a unique edge that we believe start-up providers simply cannot match” he said.
Interactive Brokers is another firm that has gone through a series of changes recently. A very long established company, its founder and CEO Thomas Peterffy, one of the most admirable and capable leaders in the history of electronic trading having retired, and some of the company’s infallible gloss having peeled off.
The company had been in such good condition under Mr Peterffy’s leadership that it had always maintained way above the required $20 million in regulatory capital required by the NFA to maintain an RFED license, that perhaps those who stepped into Mr Peterffy’s shoes had done so with a degree of complacency. There have been a few examples of litigation recently, on subjects which were notable by their absence under Mr Peterffy’s four decade long leadership.
Interactive Brokers during the latter years of its founder’s tenure had moved away from direct retail business in Western markets (you can still get a retail account in Hong Kong), and had moved toward Eligible Contract Participant business – however FXCM’s retail stock offering in partnership with Interactive Brokers is very interesting.
Not only does it demonstrate FXCM’s keen interest in returning to market at the top level, but also shows Interactive Brokers’ flexibility to look at new partnerships, something it has often been reluctant to do.
Should these projects be properly capitalized and free from any form of concealment of execution methodology, it would be fair to say that this is a welcome addition to the UK market, perhaps rivaling some of Hargreaves Lansdown’s well established products and offering a cheaper and more accessible option than traditional (and no more trustworthy!) St James Park area stockbrokers.
Onwards and upwards….