forex magnates q1 2013 industry report preview

7/28/2019 Forex Magnates Q1 2013 Industry Report Preview

1/19

FOREX MAGNATES QUARTERLY MARKET

REPORT FOR Q1 2013

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2/19If you have any questions or comments please contact us at [email protected]


3/194 www.forexmagnates.com

Content Index

1. Q1 2013 Forex Market Overview page 7

2. Institutional and Retail Forex Volumes page 10

3.Exchanges Update Q1 2013 page 23

4.Binary Options Update Glass Ceiling and Regulation

page 245. Media Forex Websites Traffic Survey: Q1 2013 page 25

6. Articles:

t*'9&910.BDBV##'PSFY$POGFSFODF3FWJFXopage 31

t"'JOF#BMBODFo4USBUFHJDBOE5FDIOPMPHJDBM3JTL

Management page 33

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Liquidity -page 39

t$VTUPNFS&OHBHFNFOU4PMVUJPOTo"O"VUPNBUJD$IPJDF

- page 43

t4PVUI"GSJDBo"8FBMUI0G3FTPVSDFT"8FBMUI0G*OWFT-

tors page 46

t7JFX'SPN5IF/PSUIo4DBOEJOBWJB4IPXT4USFOHUIBOEStability Evolving Every Step of the Way page 51

t)POH,POH5IF#JH"QQMFPG5IF'BS&BTUopage 56

t3FHJPOBM0WFSWJFX(SFFDFopage 61

t3FHJPOBM0WFSWJFX3VTTJBopage 62

t3FHJPOBM0WFSWJFX5VSLFZopage 63

t3FHJPOBM0WFSWJFX$IJOBopage 64

t5IF&NFSHFODFPG$PNNPEJUZ&YDIBOHFTo"TJB'PSHJOH

Ahead page 67

t'PDVTPO5IF.JEEMF&BTUopage 74

t5IJSE1BSUZ"OBMZTJT%PJOH:PVS3FTFBSDI'PS:PV

page 78

t"U5IF4IBSQ&OEo.VMUJ#BOL1PSUBMT7JF'PS4VQSFNBD

page 81

t#JOBSZ0QUJPOT2*OEVTUSZ3FWJFXopage 87

t4FDVSJUZPG'VOETo"O*OTJHIUJOUP3FTQPOTJCJMJUZopage 9

t$PNJOH4PPO#SJEHFMFTT.5opage 101

t'94FUUMFNFOUo(FUUJOH:PV:PVS.POFZopage 106

t5IF*OUFHSBUJPOPG"HHSFHBUJPO$JUJ'95SBEF4USFBN

page 112

7..BKPS/FXTPGUIF2VBSUFSopage 114

8.%FUBJMFECSPLFSJOGPSNBUJPOGPSUIFMBSHFTUCSPLFSTJOUFSNof volume page 151

9.3FDPNNFOEFE4FSWJDF1SPWJEFSTopage 169

10. Forex Industry Biggest M&As and Investments

page 177



Q1 2013 Forex Market

Overview

Starting the year on a fresh page, after a weak 2012 for the

industry, 2013 began with a bang. The combination of a spike

in currency volatility along with increases in client assets that

took place during 2012 led to record volumes occurring in

the retail space. While last year was known for consolidation,2013 could see a return to aggressive expansion take place.

While the euphoria was appreciated across the globe, one re-

gion that suffered during the quarter was Cyprus and its forex

sector.With the country in the midst of a financial crisis, a hair-

cut on bank deposits was proposed by the government. The

events caused a decline in confidence to local firms. The result

of this loss of confidence will take some time to propagate

but what appears to be an interim solution going forward is

that most local brokers will stay regulated in Cyprus due to

easygoing local regulation but will keep corporate and client

bank accounts offshore. Other key events during the qua

ter included further encroachment by MetaQuotes with its 3

party providers and changes in regulation.

Spiking Volume The Japanese yen began to heat up the end of 2012, and then really got going during 2013

the Bank of Japan is presently involved with an aggressi

stimulus policy to invigorate the local economy. The result w

a much weaker Yen. In addition, fellow currencies also join

the party as large moves in the euro triggered an increase

overall currency activity to start the year. For brokers, the r

turn of volatility not only drove volumes well above 2012 leve

but led to multiple records to be broken. Most notable we

volume figures in Japan, where the worlds largest retail br

ker by volume, GMO Click Securities achieved a global reco

for monthly trading of $861.7 billion in February. Similarly, f



Monthly Totals (in Billions)

Average Daily Volumes (in Billions)

-

5.000,0

10.000,0

15.000,0

20.000,0

25.000,0

Mar12

Apr12

May12

Jun12

Jul12

Aug12

Sep12

Oct12

Nov12

Dec12

Jan13

Feb13

EBS

FXall***

Hotspot

Reuters

FXCM

CLS Bank****

CME*TFX (Click 365)*

GTX **

-

200,0

400,0

600,0

800,0

1.000,0

1.200,0

Mar12

Apr12

May12

Jun12

Jul12

Aug12

Sep12

Oct12

Nov12

Dec12

Jan13

Feb13

EBS

FXall***

Hotspot

Reuters

FXCM

CLS Bank****

CME*

TFX (Click 365)*

GTX**


6/19 If you have any questions or comments please contact us at [email protected]

0

100

200

300

400

500

600

700

800

900

Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013

GMO FXCM Saxo Bank DMM.com Gai tame Online Cyber Agent FX

Q1 2013

Performance of the top 6 global forex brokers in past 12 months

Top 6 Largest Global Brokers

.POFZ1BSUOFST6%

4#*

'95SBEJOH4ZTUFNT

Cyber"HFOU'9

9%

)JSPTF5TVTIP

Gaitame.com

3%

IG Group 3%

Oanda 3%Traders Securities

3%

Alpari5%

Saxo Bank6%

GaitameOnline

7%'9$.

8%

%..15%

GMO Click 20%


7/19 3If you have any questions or comments please contact us at [email protected]

%VSJOH +BOVBSZ 'PSFY .BHOBUFT DPIPTUFE UIF *'9&910

'PSFY $POGFSFODF JO .BDBV UPHFUIFS XJUI $POWFSTJPO1SPT

The event was the largest Asian B2B forex conference ever to

have taken place. Joining 60 sponsors were over 1,200 at-

tendees from the entire Asian region encompassing key coun-

tries such as Japan, India, Indonesia, Singapore and China.

The two day event provided a combination of networking and

educational opportunities for attendees. Exhibiting western

firms gained exposure to what was for many an entirely new

audience. It also allowed companies to learn about the cur-rent demands and interests within the region. Many exhibitors

made their first trips to this part of the world culminating in

one particular common positive feedback received by Forex

Magnates being the strong interest in forex and trading oppor-

tunities in Asia. With much of the industry seeing contraction

take place over 2012, the strong demand in Asia contrasted

with the overall global scene. The contrast and importance of

Asia was highlighted during January, as major Japanese forex

brokers had all reported record volumes on the heels of surg-

ing trading in the Yen.

The first day event opened with a traditional awakening of the dragon ceremony

IFXEXPO Macau B2B Forex Conference Review

In addition to the vast networking opportunities, the eve

featured numerous expert panels for attendees to learn mo

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MJRVJEJUZNPCJMFUSBEJOH4PVUI&BTU"TJBT'9$'%NBSLFU

dia, execution, social trading, commodities and binary option

Review of Key Panels:

Mobile Trading Panel

'PS'PSFY.BHOBUFTUIF.PCJMF5SBEJOH1BOFMXBTBOFBHFawaited discussion as it was moderated by our very own A

Siddiqui and covered a topic that is one of the most importa

trends taking place in forex trading. Over 2012 we saw lea

JOHCSPLFST4BYP#BOL(BJO$BQJUBM0"/%"BOE*((SPV

all post high penetration of their mobile trading platform an

announce that mobile is a key focus of their business.

Whilst panelists were equally excited about the prospects

mobile, leading the discussion was Vinod Muthukrishnan fro

Market Simplified whose company provides mobile solutio



Point to Point Private Networks Connecting Traders To Liquidity

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dollars on colocating its servers near exchanges and liquid-

ity providers, buying the fastest servers, and developing flex-ible front-end trading platforms, all to ensure their clients have

access to low latency pricing. But despite this, clients from

around the world still cannot take advantage of the low latency

solution due to network bottlenecks between themselves and

the broker. This can happen whether it is a trader accessing

the network from an emerging market or even from a neigh-

boring country.

With the maze of telecom companies, fiber optic cables, and

jumps needed to connect between two parties, latency through

public networks is a given and often hard to forecast. Even

when a trader does have a smooth connection, continued tele-

com consolidation and the buildup of new networks can create

changes overnight that can hamper the broker/client link.

4PMWJOHUIJTQSPCMFNBSFQSJWBUFOFUXPSLT1SJWBUFOFUXPSLT

consist of point to point connections where a trader connects

to a local high-speed network, which is linked to the interna-

tional broker. The result is that rather than depending on public

networks to reach the foreign broker, all they have to worry

about is connecting with a local destination.

Using point to point connections, brokers can establish localaccess points where their clients can leverage the high speed

network to take advantage of firms low latency solutions on

which they spent large sums of money to create. This can be-

come especially useful in attracting clients in foreign countries

where firms can boast that their clients will be on pretty much

the same playing field as those next door to the broker.

Milliseconds Count

When speaking to traders and network vendors, the need for

speed is an overall theme. With billions of dollars on the line,

having the fastest execution often means getting filled beforethe competition. This has become increasingly the case in re-

cent times with much of the worlds trading being executed

electronically, and automated strategies that hone in on mar-

ket inefficiencies that may only exist for mere seconds.

Even among traditional over the phone and point and click

trading, the bottom line is that there is another trader on the

phone or with a computer in a building next door that is com-

peting for the same trade. Specifically, when trading across

different countries, having access to a faster connection is a

vital factor when competing against local traders. As suc

point to point connections along with colocation of hostin

solutions have become a staple of every advanced financfirm around the world.

Opening Up New Markets

With Europe being in the midst of a financial credit crisis, th

6,FYQFSJFODJOHBVTUFSJUZNFBTVSFTBOEUIF64POMZSFDFOU

seeing itself make a reversal from the 2008-9 economic co

lapse, brokers and banks have been looking beyond the e

tablished financial centers for new clients.

Increasingly, industry focus has moved towards emergin

markets, specifically, China, Brazil, Russia, and South Ea

Asia. Competing against domestic players, foreign firms hav

targeted these new regions with the establishment of local o

fices. While entering a foreign country is tricky and requires a

eye of local customs and interests, western firms have see

success in emerging markets.

Explaining the added value that

western firms provide, Fraser

#FMM.BOBHJOH%JSFDUPSBU#40

/FUXPSL 4PMVUJPOT XIJDI JT B

low latency global infrastructurespecialist said Talented people

are among the biggest thing that

global financial firms bring when

they enter new markets. They

have people who have experi-

ence, knowledge and under-

standing in the industry and can

provide these skills to clients

in new regions. Also, western

firms bring the brand, and access of capital. As such, Be

XIPTFDPNQBOZBTTJTUTmSNTTQFDJmDBMMZJOUIF6,UPPQ

overseas offices, believes that due to the advantages westecompanies provide, there are favorable opportunities whe

expanding into emerging markets.

Also, while in the past firms may have needed to build o

much of their own infrastructure to operate a point to poi

network, companies can nowadays take advantage of exis

ing infrastructure, including fiber routes and hosting facilitie

at financial hubs. Bell explained that they take advantage

fiber existing routes that can add value for customers, suc

BT CFUXFFO -POEPO .PTDPX %VCBJ PS 4JOHBQPSF XIF

Fraser Bell, Managing Director

BSO Network Solutions


9/19 If you have any questions or comments please contact us at [email protected]



Hong Kong - The Big Apple of The Far East

The ex-British territory in the Far East has been striving to

maintain its golden historic reputation as a leader in finance

and economy within the British Empire. Conveniently locatedBTBCSJEHFCFUXFFOUIF'BS&BTUBOE$FOUSBM"TJBMFBEJOH

POUP&VSPQFUIFJTMBOEPG)POH,POHIBTUSBEJUJPOBMMZCFFOB

strategic place for trade and commerce.

It still enjoys semi independence but since Britain handed

control of the territory back to China in 1997, it now lives

in the lengthy shadow cast by mainland China. It has po-

sitioned itself as the visa office for doing business in Chi-

na and subsequent to the Chinese economic revolution the

crossing station for Chinese firms looking to go global. It is

regarded as the 6th largest foreign exchange market, and on

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and investigate as to whether it lives up to its overall reputation

as Asias financial capital.

The Economy

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in the world. The island nation is regarded as being home to

the worlds freest economy, according to Index of Economic

Freedom since the inception of the index in 1995.

(PWFSOFE VOEFS QPTJUJWFOPOJOUFSWFOUJPOJTN)POH ,POHJThighly dependent on international trade and finance and in

2009 the real economic growth fell by 2.8% as a result of the

global financial turmoil.

The country has experienced substantial economic devel-

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,POHJTSFQPSUFECZUIF$FOTVT4UBUJTUJDT%FQBSUNFOU

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Rate averaged 0.98%, reaching an all-time high of 6.30%

in September of 2003 and a record low of -3.50% in March

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Taiwan is one of the Four Asian Tigers.

Being conveniently located adjacent to southern China,

with some of the country actually situated on the mainland,

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POEPOMZUP/FX:PSLBOE3PUUFSEBNJOUFSNTPGDPOUBJOFS

throughput.

The Banking Sector

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central bank, therefore banking is free and market driven. T

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211 authorised financial institutions including giants such )BO 4FO #BOL )POH,POH4IBOHIBJ #BOLJOH $PSQPSBUJ

)4#$BOE#BOLPG$IJOB

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,POHTmOBODJBMJOTUJUVUJPOTQFSGPSNFEXFMM

"DDPSEJOHUP UIF),."T)BMG:FBSMZ.POFUBSZBOE'JOBOD

Stability Report, the consolidated capital adequacy ratio of l

cally incorporated authorized institutions edged up to 15.9

at the end of June 2011, from 15.8% at the end of 2010. T

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UPUBMSJTLXFJHIUFEBTTFUTJODSFBTFEUPGSPN

5IF ),." SFQPSU TIPXFE UIBU BU UIF FOE PG 4FQUFNC

UIFSFXFSFMJDFOTFECBOLTPGXIJDIXFSF

DPSQPSBUFEPVUTJEF)POH,POHSFTUSJDUFEMJDFOTFCBO

PGXIJDITFWFOXFSFJODPSQPSBUFEPVUTJEF)POH,POHB

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comprehensive network of 1,300 local branches. In add

tion, there were 65 local representative offices of overse

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Total Employment in the sector is around 80,000. Banking a

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Stock Markets

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equity markets, and the first formal securities market plac

HSBCs Hong Kong Office



KEY FACTS:

Population:mHVSFT

Currency: &VSP&63

Membership: EU, Eurozone

Regulator: )FMMFOJD$BQJUBM.BSLFU$PNNJTTJPO)$.$

Economic Overview:

With the exception of the Greek economic miracle period of

XIFSF(%1HSPXUIBWFSBHFEUIFDPVOUSZIBT

consistently suffered many economic peaks and valleys. Re-

cently, since inclusion in the Eurozone, the country underwentanother period of prosperity as the standard of living rose to

near parity with Western neighbors such as France, and the

relatively high unemployment levels became manageable.

)PXFWFSEVFUPMBYUBYSFWFOVFDPMMFDUJPOTBOEJODSFBTJOHHPW-

ernment budgets, the country has been hit by a severe credit

crunch. The crisis led Greece to enact austerity budgets, collect

bailout funds from the EU and IMF, as well as restructure its debt.

The problems led to riots and speculation of whether the country

being booted out of the Eurozone. Economically, tourism, the

countrys most important industry has been hit hard as tourists

have worried about violence taking place.

Forex Landscape

Although the country is home to a sizable population, the forex

USBEJOHJOEVTUSZJO(SFFDFJTRVJUFTNBMM)PXFWFSUIFDPVOUSZ

does have an active trading population as witnessed by its

well-developed capital markets structure which includes re-

gional equity and derivatives exchanges. Another factor that

has led to the slow adoption of forex trading is the Greek lan-

guage. With a small global population of speakers, foreign

brokers have been slow to rollout Greek language sites and

NBSLFUJOHNBUFSJBMTUPUBSHFUUIFDPVOUSZ)PXFWFSUIJTIBT

been changing as Cyprus has become a growing international

center for forex brokers. As such, with an established base

of traders, and growing Greek language forex sites, there is

potential for faster growth to take place as the country rights

itself following the current economic crisis.

With a small contingent of traders, the majority of local pres-

ence is through foreign brokers with offices in the country;

Regional OverviewGreece

Being included in the Eurozone has kept Greeces inflation in check. Howev

it has also limited the countrys ability to devalue its currency to stimulate tra

growth. This led Greeces main export and tourism industry to be less attra

tive to foreign buyers and has contributed to continued high unemployme

As seen below, even before the countrys current credit crisis, jobless ra

have been an ongoing problem since 2000.

alongside local firms who are IBs are larger brokers. The o

notable Greek broker is AAAFx, which is closely aligned w

;VMV5SBEF"MUIPVHI)$.$MJDFOTFEBOEMPDBUFEJO(SFFD

the broker has very few Greek clients with the majority bein

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CSPLFSTXJUIMPDBMPGmDFT4BYP#BOLBOE'9$.IBWFUIFMBS

est client base in the country. More prevalent in Greece a

Cyprus based brokers which compose the largest group

foreign companies marketing in Greece.

As the forex industry is not very developed in Greece, broke

marketing their services in the country are advised to use ge

eral media portals to reach potential clients. Major portals th

contain finance sections includehttp://www.newsit.gr,http

finance.in.gr, andhttp://www.protothema.gr/economy.

Finance specific sites include http://www.greekmoney.

http://www.imerisia.gr,http://www.express.gr

Expanded Report is available in Forex Magnates we

sites Research section.

Average ination rate in 2000-2011

0,0%

0,5%

1,0%

1,5%

2,0%

2,5%

3,0%

3,5%

4,0%

4,5%

5,0%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 201

Unemployment rate in 2000-2011

0,00%

2,00%

4,00%

6,00%

8,00%

10,00%

12,00%

14,00%

16,00%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 201



At The Sharp End Multi-Bank Portals Vie For Supremacy

The decade long battle between single bank and multi bank

platforms has taken an interesting turn during the last 12NPOUIT BTB TVEEFO JOnVYPG'9 &$/TDBNFJOUP UIF MJNF-

MJHIU&MFDUSPOJDUSBEJOHJO'9NBSLFUTXBTEPNJOBUFECZUIF

mammoth banks during the course of the 1990s, and with the

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trading. The multi bank players performed a key role in the

overall sophistication of the market as flexible and innovative

ideas came into being, resulting in the waking up of the devel-

PQNFOUUFBNTJO3%MBCTPGUIFCBOLT5IFNVMUJCBOLQMBZ-

ers dried up in the latter part of the last decade but significant

changes in the operations of the market and new entrants in

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Background of the ECN Market

&$/TIBWFCFFOQSPNJOFOUJOUIFFMFDUSPOJDUSBEJOHNBSLFU

PWFSUIFMBTUZFBST.BUDI#PPL'9XBTUIFmSTU&$/XIJDI

XBTFTUBCMJTIFEBMNPTUZFBSTBHP.BUDI#PPL'9DPVME

be considered to be the first company providing an online

'9 USBEJOH QMBUGPSN 'PVOEFE JO.BUDI#PPL '9 XBT

BOF'9QJPOFFSBOEIFMQFENPWFUSBEJOHBXBZGSPNWPJDFUP

electronic trading. The firm was closed in 2002 after its parent

group suffered losses in the dot.com bubble.

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JOOVNCFS5IFQSJNBSZSPMFPGUIF&$/JTUPTJNVMUBOFPVTMZ

match two way prices in a cross network, connecting buy-

ers and sellers to multiple liquidity providers. Technological

enhancements have been driving volumes in the multi bank

direction as new trading styles such as high frequency trad-

ing have created an environment where orders are stripped

and chopped and aligned to several counterparties, an area in

which the single banks were less welcoming.

*OUIFFBSMZZFBSTPGUIFNJMMFOOJVNUIFLFZ'9QPSUBMTXFSF

'9BMM$VSSFOFYBOE'9$POOFDU'9BMMBOE$VSSFOFYUFOEFEto attract direct corporate customers and institutional traders

XIFSFBT'9$POOFDUIBTUFOEFEUPBUUSBDUGVOENBOBHFSDMJ-

FOUTNBJOMZBJNFEBUCVZTJEF)PXFWFSBMMBSFMPPLJOHUP

expand their customer base into other sectors, increasing

competition between the portals. The daily volumes through

these portals were a positive sign in the transition from voice

to electronic trading. Volume estimates suggested $7bn per

EBZJO .BZ DPNQBSFE UP CO QFS EBZ CZ 0DUPCFS

BDDPSEJOHUPBTVSWFZDBSSJFEPVUCZ$MJFOU,OPXMFEHF

)PUTQPU'9BO&$/QPSUBMMBVODIFEJOTIPXFEMJWFEF-

BMBCMFQSJDFTXIFSFBT'9BMMBOE$VSSFOFYEJTQMBZFEUIFS

RVFTUGPSRVPUF3'2)PUTQPU'9JOJUJBUFEJUTSFJHOXJUI"*BOE#FBS4UFBSOTBMPOHXJUIPUIFS'9QSJNFCSPLFST

Around the same time Atriax, a bank lead initiative to launc

the first multi-asset trading platform went live with the leadin

OBNFTJO'9BOESBUFTCBDLJOHJU"USJBYXBTEFWFMPQFEC

Integral and aimed to be the preferred venue for e-trading.

5IFA)BSFBOE5PSUPJTFSBDFIBTIBEJUTWPMBUJMFQIBTFTXIF

.VMUJ%FBMFS1PSUBMT.%1FOKPZFETVDDFTTXIFOmSTUMBVODIF

CVUXFSFRVJDLMZPWFSUBLFOCZ4JOHMF%FBMFS1PSUBMT4%15

SJTFUPQSPNJOFODFPG4%1TPDDVSSFEOFBSUIFMBUUFSFOEPGUI

MBTUEFDBEFXIFOCBOLTXFSFSFEFWFMPQJOHUIFJS'91#VOJUTthe back of the AIG and Lehman downfall.

)PXFWFS UIJT %BWJE BOE (PMJBUI CBUUMF

has its own charm. John Owens, Vice

1SFTJEFOU &YDIBOHFT BOE &$/T BU

5/4 B mSN XIJDI QSPWJEFT DPOOFDUJW-

JUZUPCBOLTBOE&$/CSPLFSTPQJOFTi*

think that we are in a period of realign-

ment currently and although there is

competition, both types of platform can

DPFYJTU1MBJO WBOJMMB USBEJOH XJMM HSBWJ-

tate towards the multi bank platforms

while the single bank platforms will main-

tain a presence to provide the added level

of customer service and care required for

dealing with larger more complex trades. We must also remem

ber there is a cultural issue to address, where relationships a

crucial, so maintaining that one-to-one relationship with a sing

platform enhanced by electronics will add value.

i5IFMPOHTUBOEJOHDBUBOENPVTFSBDFCFUXFFO.%14%

has been driving innovation in the market. Both segmen

complement each other and in essence have their own posUJPOJOUIFNBSLFU&$/TDPNQMFNFOUCBOLTUISPVHIHBJOJO

access to their network.

+PFZ)PSPXJU[$50PG5SBEJOH1PJOUCFMJFWFTUIBUUIFCBUUMF

XJMMDPOUJOVF)FTBZTi4JOHMFCBOLQPSUBMTXJMMBMXBZTFY

because banks want to offer their unique value directly to c

ents and lock in their business. Multi-bank portals will co

tinue to compete as they gradually merge into the great

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accessible easily by traders over the same widely recognize

John Owens, Vic

President, Exchan

and ECNs at TN



FX Settlement Getting You Your Money

If youve spent any time watching the chaos of the live trad-

ing pits at leading exchanges such as the CME, CBOT, or

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executed and reported. Within the maze of specialist booths

and flying paper, trades are being crossed and buyers and

sellers are recognized. While the occasional errors occur, this

wild system is highly efficient at reporting and settling trades.

In the world of OTC, settlement represents a larger factor, as

participants are not bound by a central exchange system that

insures against counterparty risk. As such, companies are on

their own to ensure that trades are settled correctly with their

counterparties and an exchange of funds takes place.

In this report, we take a look at the operations of the CLS

#BOLBOE5SBJBOBBOEIPXUIFJSQSPEVDUTIFMQ'9QMBZFSTIBO -

dle their settlement needs, create efficient markets, and lower

overall transaction costs.

CLS Bank

Launched in 2002, CLS Bank was created as a private sec-

tor initiative to deliver and operate services to mitigate settle-

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institutions and working alongside central banks, CLS offersmembers the ability to settle trades within a central location,

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To understand what CLS does, it is first important to know

how settlement works. Settlement is the process in which the

payment and securities of a transaction are delivered. Within

the securities world, this occurs in a three day window. For

example, if a trader buys 100 shares of IBM stock at $100/

share, the broker has three days to collect the $10,000 from

the client, transfer it to the seller, and collect the shares back

for the client.

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EJGGFSFOUDVSSFODJFT5IFSFGPSFJOB&6364%USBEFUIFTFMMFS

sends dollars while receiving euros. For OTC participants, one

of the greatest worries is settlement risk, which occurs when

a counterparty is unable or unwilling to provide either the pay-

ment or transfer of securities.

While a deal between two parties can easily be voided, thus

limiting impact of a problematic counterparty, the greater con-

cern is the systemic risk. As traders are simultaneously trading

with multiple parties, if one party fails to honor a transaction

can affect counterparties and could prevent them from havi

the funds and/or securities to settle other trades.

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name is derived from the failure of a privately owned Germ

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had been put into receivership before the corresponding do

lars were sent, due to the time zone difference. Smith e

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volumes growing substantially since that time, settlement rihas grown significantly.

To mitigate this risk, CLS was created. Currently, there a

over 60 members, which represent some of the largest fina

cial institutions from around the world. CLS provides a cent

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and their customers. To facilitate settlement, all members a

required to have a single multi-currency account with CL

supporting the 17 currencies that are settled by its system.

Settlement

After conducting a trade, members send transactional d

tails to CLS Bank, including trade details, counterparties, an

settlement data. On the day of settlement, CLS Bank mu

laterally nets all the instructions between the settlement mem

bers, calculating each institutions pay-in obligations for t

day to ensure settlement of all their instructions on a paymen

versus-payment basis. As settlement completes, pay-out

multi-laterally netted long balances will occur.

Example: GBP/USD = 1.50, EUR/USD = 1.25

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.(#1


14/19If you have any questions or comments please contact us at [email protected] 11

Major News of theQuarter

ICAP Announces Increase in Electronic Broking Volumes Up 3%

Year on Year

*OBA5BMFPG5XP4UPSJFTMFBEJOHJOUFSEFBMFSCSPLFS*$"1BOOPVODFEUIBUEBJMZBWFSBHFWPMVNFTEVSJOH%FDFNCFS

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UIFNPOUIPG%FDFNCFSXBTCJMMJPO)PXFWFS*$"1T'9USBEJOHVOJUTBXZFBSPWFSZFBSSFTVMUTESPQ

UPCJMMJPO"%7BNVMUJZFBSMPXBUUIFWFOVF

Read the Entire Article

January



Detailed broker information forthe largest brokers in terms of

volume

FXCM

Saxo Bank

Alpari

IG Group

OANDA

Gain Capital

GFT

CMC

FxPro

GMO Click Securities

DMM.com

CyberAgent FX

Money Partners



Name: $ZCFS"HFOU'9

Status: 1SJWBUF

Year Established: 2003

Shareholders and Funding:Yahoo Japan Corporation

Investments and M&As: "DRVJSFECZ:BIPP+BQBOGPSNJMMJPO%FDFNCFS

President, Representative Director: Masahito Ito

Capital:dNJMMJPO

Reported Net Profit in 2013 (4/2012-3/2013):/"

Trading volume (OTC): dNPOUITBWFSBHF/PW'FC

Number of Accounts (OTC+Click365): NPOUITBWFSBHF/PW'FC

Total Deposit (OTC+Click365): dNJMMJPO'FCRegulation: Japan FSA

News:5SBOTGFSBMMPGUIFTIBSFTPG$ZCFS"HFOU'9*ODIBTCFFODPNQMFUFEUP:BIPP*ODEBUFEPO+BOVBSZ

Month Trading

volume (OTC)

(in million yen)

Customer

accounts

(OTC)

Customer

accounts

(Click365)

Deposited

Amount (OTC)

(in million yen)

Deposited

Amount (Click365)

(in million yen)

Jan-12 85,173 173,881 72,231 5,738

Feb-12 120,192 178,185 76,719 5,358

Mar-12 150,816 181,969 80,625 5,286

Apr-12 116,763 82,905 5,283

May-12 115,075 82,905

Jun-12 87,581

Jul-12 109,199 190,329 89,575 55,168

Aug-12 106,872 191,839 91,156 56,253

Sep-12 107,689 193,556 92,950 56,730

Oct-12 57,930

/PW 197,615 97,129 57,990

%FD 199,258 98,866 57,505

Jan-13 202,097 101,780 5,102

Feb-13 326,026 206,059 105,817 62,825



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19/19

Forex Industry BiggestM&As and InvestmentsBroker Type Amount Value

0"/%" InvestmentInvestment

Acquisition

$100m$17m

-FHH.BTPO$BTDBEF*OWFTUNFOU53PXF1SJDFIndex VenturesJapanese broker MyGaika

09/200709/200508/2011

Gain Capital InvestmentAcquisitionAcquisition*10

AcquisitionAcquisitionAcquisitionAcquisitionAcquisition

$8m+15%$9.7m$12m

$279m$32m$55m$12m

$175 million invested in the company in totalFortune Capital Japan its white label

Acquisition of MG Financials retail Forex business*10/:4&($"1

Acquisition of retail Forex business of CMS Forex"DRVJSFEUIFDMJFOUCBTFPGEC'9XIJDIFYJUFE64"DRVJSFEPG0QFO&$SZGSPN0QUJPOT9QSFTTAcquired US clients base of GFT"DRVJSFE64DMJFOUTCBTFPG'94PMVUJPOT

-201003/200905/201012/201001/201105/201106/201212/201202/2013

City Index AcquisitionAcquisition $100+m

bN$300m

*'9.BSLFUTBDRVJTJUJPOJODMVEJOH'JOTQSFBET'94PMVUJPOBDRVJTJUJPOJOTIBSFTXBQJODMVEJOH'SBODJTDP1BSUOFSTTUBLFCVZPVU

08/200602/2008

*OUFSCBOL'9 Investment N Investment from Spectrum Equity InvestorsAcquired by TradeStation for $17m net of cash

07/200711/2011

IG Group AcquisitionAcquisitionAcquisition

$6m$207m $236.6m

/BEFY)FEHF4USFFUTUBLFBDRVJTJUJPO'90OMJOF+BQBO*EFBM$'%XJUIUSBEFSTBOELJODPNF

200709/200809/2010

'9$. EquityAcquisition

$

Refco sold a 35% stake to Lehman and Long Ridge"DRVJSFE)PUTQPUT64SFUBJMCVTJOFTT

200701/2009

forex magnates q1 2013 industry report preview

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