5Editor's Note

Section 1 | Q4 2013 Forex Market Overview Forex Market Quarterly OverviewInstitutional FX Volumes ReviewRetail Forex VolumesRetail Forex Volumes By AccountRetail Forex Volumes By MT4 UsageExchanges UpdateBinary Options Update Regulation Update

Section 2 | Articles

Low FX Volatility: Diversifying in an increasingly challenging environment Tradable: Platform of the Future, or Just a Niche?North Africa: The Rising Star of FX tradingThe Inexact Science Of Social MarketingReaching the Other Billions: The Case of FX on Chinese Social MediaNew Zealand Country Report: Regulation as a Game Changer?What, who & where: EBS Directs Disclosed LiquidityRegion-Based FX Liquidity: Trend of the Future or a Pipedream?Social Trading Regulation: Costs and Benefits of the InevitableBetween the EU and Russia: Ukraine Country ReportSingle Bank Platforms: Stay Ahead of the RestSentiment Analysis Tools: How Can the retail market master a World of BigData?Computer Vs. Man: Has Technology Already Made Salespeople Redundant?Will Upcoming Regulation Curb Innovation? Israel Country ReportJapan: A Costly Sales Tax Hike and its Implications on the Japanese Yen Market

Section 3 | Detailed broker information

Forex Industry Biggest M&A and Investments

Section 4 | Major News of the Quarter

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CONTENTINDEX

9M A R K E TO V E R V I E W

Section

01

Institutional FX Volumes' Review Retail Forex Volumes Retail Forex Volumes By Accounts Retail Forex Volumes By MT4 Usage Exchanges Update Binary

Options Update Regulation Update

12

OVERVIEW01

Halfway through the year, most players in the for-eign exchange industry

have realized that 2014 is going to be much different than previous years. The most notable contrasts being lower volatility and lower volumes that have taken center stage since the beginning of 2014 and continue to drop further as the second quarter of the year unfolds.

The markets mood swings have impacted the industry in very tan-gible ways: Decreasing trading activity, increasing uncertainty regarding profitability and clients who suddenly lose interest in Forex trading under such conditions.

Low Volatility Paradigm

Some major players in the industry

perceive this stagnation in FX trad-

ing as a new paradigm settling in

the market, as detailed in our Quar-

terly Industry Report article which

reviews this phenomena. With G7

interest rates still at all-time low,

there is little indication that a mate-

rial change is expected in the near

future, to turn the mood of curren-

cy traders and bring a more volatile

environment to the markets.

Primary dealing banks and major FX prime brokers are also reduc-ing their risk exposure in the Forex market. This is in part due to ongo-ing investigations of FX rate fixing manipulation, but primarily a re-sponse to decreased profit oppor-tunities in the market. While not affecting volatility on its own, the decrease in risk taking has rein-forced the decrease of market ac-tivity in Forex prices. Ultimately, the main factor affect-ing currency markets has always been central bank policies. When G7 decision makers continue their crusade against seemingly low in-flation, keeping real interest rates below zero, monetary policy mak-ers in some emerging markets de-preciate currencies despite political pressures. In both cases, central banks and exchange rates have be-come a political tool, historically a trigger of FX volatility. So when can we expect volatility to reappear?

The ECB Factor

The first quarter of 2014 was widely

affected by the Russian-Ukrainian

geopolitical spat and the Federal

Reserve tapering effort. But during

FOREX MARKET QUARTERLY OVERVIEW

the second quarter, it was the spirit of European monetary policy makers which set the direction for activity across the currency market. The Eu-ropean Central Bank (ECB) has taken center stage with Mr. Draghis com-mitment to price stability with in-flation rates just under two percent.

This was driven with three month-ly ECB meetings which managed to trigger some moves in an oth-erwise muted FX trading. The third meeting was held in early June, when the ECB, hoping to expand its balance sheet, introduced a negative deposit rate and a set of measures aimed at boosting pri-vate lending. June 5th, the day of the meeting, was the most active single day in the past six months in terms of trading.

While some analysts predict that the euro will not be harmed by the ECBs bid to boost a benign infla-tion rate of about 0.5%, Mr. Draghi is known for his appetite for "in-tervention". That said, the cen-tral bank itself is not expecting any major move on the currency market anytime soon. Its mac-roeconomic projections, which used to guide monetary policy decisions, indicate a 1.38 EUR/USD handle until the end of 2016.

The British pound has hit new multi-year highs against its ma-

13

jor counterparts, as the Bank of England Governor, Mark Car-ney, signaled that the bank may be the first major one to raise rates before the end of this year. Several trading venues have re-ported record volumes in British pound trading following the news.

Across the Atlantic, the Federal Reserve has been taking its time with reducing monetary eas-ing measures. Further to the west and across the Pacific, the Japa-nese economy has been hit with a sales tax hike that came into effect at the beginning of the quarter. The controversial move triggers various discussions amid a major contraction in growth over the second quarter of 2014.

Mobile Advertising

Over the last two years, much has been devoted to the importance of mobile trading for brokers. Lag-ging a bit though has been mobile advertising. However, with con-version costs estimated at 25% to 50% lower of that of regular display advertising, weve been hearing more talk about mobile. The tricky part isnt using mobile advertising to bring visitors to your site, but what to sell them. Leveraging the platform, 2014 has begun to see a greater array of brokers launching mobile campaigns with links go-ing to their apps on Google Play or iTunes. One caveat, the process is still filled with friction, as even af-ter downloading an app, users still have to create an account and con-

firm their emails. Also, you cant deposit directly using your iTunes or Google Play account as Apple and Google will grab 30% of the fee. All of this means that whoever comes up with a reduced friction mobile platform for handling pay-ments and opening accounts will find a great opportunity to grab a large section of the lower cost mo-bile advertising market.

MT5

It seems like this platform is not re-ally taking off. MT4 and MT5 code has been altered so they are more similar than different now. Brokers can also save costs without need-ing bridge providers to access STP liquidity. Coming later this year should be a large multi-asset bro-ker signing up to offer the platform which could finally sway enough developers and traders to make the switch from MT4 to MT5.

IPO Challenges

Leading payments solutions pro-vider, Safecharge, has filed for an IPO on the London Stock Ex-change and raised $125 million in the beginning of April, with share prices trading around 171 pence per share. The sum raised was 25% higher than initially expected and share prices have moved 16%

higher by the end of the quarter to around 194 pence per share.

Just at the turn of the quarter, the stock of publicly-listed FX broker-age Plus 500 sold off sharply. British stock commentator Simon Cawk-well, also known as "Prophet of the plunge," sent an alarming mes-sage to his newsletter subscribers, which triggered share prices of Plus500 to drop in a quick fash-ion from just below 580 pence to a low of 455 in a matter of a couple of days, The brokers market cap currently stands at $953 million, after a peak of above $1.3 billion in early April. The company's'share prices have also shed almost 27% since peaking on April 10th.

Industry Wide Consolidation

One of the big players out there, OANDA, has continued its restruc-turing efforts on the senior man-agement level. During the second quarter it has tabbed Gavin Ward and Lee Cooper to head its Chinese and Antipodean operations and has parted with former Currensee CEO, Dave Lemont, who headed the firm's social trading division. OANDA also entailed the recruit-ment of former Alpari UK CEO, Daniel Skowronski, as Managing Director of its European division and of a new Chief Marketing Of-ficer Drew Izzo.

While OANDAs personnel shifts indicate the companys strive for an overall change in strategy, other industry participants are under an

43

ARTICLESLow FX Volatility Tradable: Platform of the Future, or Just a Niche? North Africa: The Rising Star of FX trading The Inexact Science Of Social Marketing The Case of FX on Chinese Social Media New Zealand Country Report EBS Directs Disclosed Liquidity Regional Based FX Liquidity Social Trading Regulation Ukraine Country Report Single Bank Platforms Sentiment Analysis Tools Has Technology Already Made Salespeople Redundant? Israel Country Report Japan: A Costly Sales

Tax Hike

Section

02

ARTICLES02

44

FX volatility levels have been quite grim recently, to such an extent that relative new-

comers to the industry who have started operating over the past five years, have never witnessed foreign exchange volatility at such lows. In fact, JP Morgans G7 FX Volatil-ity Index has not been seen since 2007, just before it took off to mark its post 2008 financial crisis highs.

There is no telling as to how long interest rates will continue to lean towards the zero. While some cen-tral banks, like the Bank of Eng-land, have signaled their intention to start raising interest rates, others have already began, like the Re-serve Bank of New Zealand.

Volatility Lies with Emerging Currencies

Todays environment is very simi-

LOW FX VOLATILITY: DIVERSIFYING IN AN INCREASINGLY CHALLENGING ENVIRONMENT

lar to the one observed between 2003 and 2007, when commod-ity exporters were actively raising rates and driving currency flows to their shores. While the Cana-dian economy is more dependent on the U.S., Australia and New Zealand are the isles of hope for yield seeking FX traders looking to take advantage of low global in-terest rates. That said, the Reserve Bank of New Zealand has already threatened intervention, so rest as-sured, the ride wont be smooth.

Under such conditions, the most challenging issue for FX broker-ages appears to be the need to change their traders habits. While G7 volatility has been low, for sev-eral years now some emerging markets currencies have demon-strated the versatility of these mar-kets and the volatility which they can provide in a short time span. The Indian rupee has been a wild

After a troubling start for 2014, prospects for the rest of the year prom-ise no material pickup in volumes, which stirs nervousness across the Forex industry.

This article will attempt to determine whether recent low volatility is a paradigm shift or a tem-porary markets hiccup, offering possible tactics for survival through a longer-term stagnation.

By Victor Golovtchenko

45

As the Future Is Unpredictable, Diversify Today

Kim Fournais, co-Founder and co-CEO of Saxo Bank told Forex Mag-nates that while current lows of FX volatility are being somewhat managed by central banks, there is still hope that geopolitical develop-ments may send volatility up in the near future. G7 currency volatility is at its lowest level in 21 years, and it has only been at these levels twice

before, in 1996 and in 2007, yet this is the lowest we have ever seen. Central banks have been playing a big part in keeping volatility ar-tificially low. Its difficult to predict how and when we will see a return to a more volatile environment. Historically, shifts in volatility have always occurred in rather aggres-sive and drastic ways. That said, it could take years for previous high levels of G7 volatility to come back to the market, but the growing geo-political tensions may play a role and we may see something happen quicker, Mr. Fournais explained.

Based on that, he voiced support of the claim that while it is almost impossible to forecast what lies ahead, brokerages better prepare themselves for a long period of similar FX volatility. We need to be prepared for this environment to last for a long time. This is not the best thing for foreign exchange as an asset class, simply because most traders and investors are there to try to make money out of fluctua-tions in currency values some-thing we are not seeing much of,

Mr. Fournais said.

The best way for brokerages to pre-pare for such a scenario and to try to make the best out of the current situation, is to diversify their of-fering. With the attention of many traders divided between different asset classes and with a continu-ous drop in trading costs, the new direction should be offering di-versification. Not all Forex trading companies have added indices and commodities to their offering and quite a few are playing catch up and losing clients in the process.

ride, falling to multi-year lows last summer. It has subsequently re-covered with the likelihood of a new government. In Turkey, dur-ing the political crisis there was a substantial depreciation of the local currency, with growing violence in Istanbul triggering routs across currency and equity markets.

The Turkish Central Bank has eventually raised interest rates dra-matically from 4.5% to 10% to pro-tect the currency. The Thai baht was inevitably affected during the protests in the country, with an on-going lack of popular trust in

Thailands political system spelling more volatility going forward. Also volatile was the Russian ruble: The price of the annexation of Crimea has seemed rather expensive when looking at the Moscow Stock Ex-change. However, since February all losses have been recovered and confidence is slowly creeping back to the market.

These four currencies have all surpassed a 10% move in a mat-ter of weeks. But being creatures of habit, traders have been large-ly ignorant as to what has been brought to the table by the market. So what can be done differently?

To answer this question, Forex Magnates brings the perspec-tive of two of the largest players in the Forex industry, the Danish multi-asset brokerage Saxo Bank and Dukascopy. We asked for the opinions of co-Founder and co-CEO of Danish multi-asset bro-kerage Saxo Bank, Kim Fournais, and Dukascopys Chief Broker Officer and Deputy Chief Tech-nology Officer, Dimitry Kukels.

Range of Major Currency Pairs (in Pips)

Source: Forex Magnates Research

2,000

5000

1,0001,500

2,5003,0003,500

EURU

SD

GBPU

SD

USDJ

PY

AUDU

SD

EURJ

PY

Fig 6.

2009 2010 2011 2012 2013 2014

1,57

4

3,24

2

1,43

4

2,01

6

2,71

4

2,70

3

2,23

1

650

1,32

2

2,70

6

1,63

9

998

759

1,14

7

980

1,27

0

1,07

1

805

1,27

7

1,44

3

845

1,32

4

1,69

8

1,49

6

2,02

8

516

808

471

803

868

ARTICLES02

56

The North African belt is lo-cated in close proximity to Europe on the west and the

Middle East on the east. The belt comprises of five countries. How-ever, for the purpose of this report we will focus on four countries due to the recent political changes that took place in two of these coun-tries, and the economic situation of the other two nations. Three of the four countries, Tunisia, Algeria and Morocco, share similar cultures and language with a significant French influence. Libya is closer to the Middle East with Arabic being the main language spoken. Egypt has been excluded due to its sheer size and is to be addressed inde-pendently in the future.

Economy

The North African region is home to the two big economic powers, Morocco and Algeria. Morocco is one of the most developed econo-mies on the continent, ranked at 5th place. Not only did Morocco benefit from economic reforms and free market practices, but also Algeria and Tunisia. In addition to such reforms implemented over the past few years, close relations

NORTH AFRICA: THE RISING STAR OF FX TRADING

between these countries and Eu-rope have translated into a large amount of trade being done with countries such as Spain and France.

Libya and Tunisia were both affect-ed by the political revolution that impacted the wider MENA region in 2011, and Libyas oil sector has suf-fered the most obvious impact with reduced supply. However, produc-tion has resumed and the economy is back in the green after splatters of volatility which saw drastic swings, such as with the countrys GDP which saw a drop of 12% in 2013.

In Tunisia, economic growth has been modest: The country that triggered the Arab Spring's flame has seen internal political malaise continue despite a new govern-ment and elections having taken place. The countrys GDP growth has dropped in 2013 to less than 3%. As Tunisia is significantly de-pendent on Europe for trade and tourism, the global recession of 2008 has impacted the nation with several European countries facing the brunt. However, current politi-cal stability and the re-emergence of Europe can be seen as the be-ginning of a better future for Tu-nisia, with economic predictions

Africa as a whole is one of the fastest growing economies on the globe, positive fundamental data from the region shows that the total GDP crossed $2 trillion and several nations are categorized as emerging or frontier markets.

This article will review the current status of FX trading in four North African countries - Algeria, Morocco, Tunisia and Libya in-forming our readers of regional opportunities.

By Adil Siddiqui

57

Morocco

Algeria

Key Facts

Population: 32 millionGDP $ billion: 191GDP Per capita $: 57,000Stock Exchanges: Casablanca ExchangeDaily Volume $ million: 4.5Internet Users: 16mFacebook Users: 5.5m

Key Facts

Population: 38 millionGDP $ billion: 302GDP Per capita $: 76,000Stock Exchanges: Algeria Stock ExchangeDaily Volume $ million: 2.3Internet Users: 5.5mFacebook Users: 4.2m

Key Facts

Population: 6.2 millionGDP $ billion: 76GDP Per capita $: 11,300Stock Exchanges: Libya Stock MarketDaily Volume $ million: 0.06Internet Users: 1mFacebook Users: 0.78m

Key Facts

Population: 10 millionGDP $ billion: 48GDP Per capita $: 91,000Stock Exchanges: Bourse de TunisDaily Volume $ million: 0.2Internet Users: 4.1mFacebook Users: 3.2m

North Africa Key FactsFig 11.

Tunisia

Libya

Key FX Metrics from Algeria, Morocco, Tunisia & Libya

Broker Number of Traders Daily Volume in $ Million Monthly Deposits $ '000

MBCFX 12,500 150 350

Horizon-FX 3,500 25 100

ForexHouse 15,000 300 500

InstaForex 2,500 30 75

Admiralmarkets 3,500 40 50

Others 3,000 50 50

Total 40,000 595 1,125

Fig 12.

Source: Forex Magnates

ARTICLES02

84

A recent change in traders behavior, coupled with technological advance-

ments, has placed trading venues in a dynamic position, thus open-ing them up to new trading strat-egies and approaches. Anonymity has been a core element in the FX markets as it dictates the way buy-ers interact with sellers on global trading platforms. However, as banks and execution venues face the numerous challenges put for-ward by the modern trader and supervisory authorities, seeing is believing, and the concept of dis-closure is increasing in institution-al FX trading. In this article we look at a new entrant to the disclosed model of trading, EBS Direct, and how it aims to position itself in a fragmented marketplace.

The Dealer-to-Dealer Market

Wholesale FX trading is a byprod-uct of international trade, as cor-porates and governments from different countries trade with one another. Domestic banks play a key role in these transactions as the primary banking institute pur-chases and sells currency on be-half of its clients: the interbank FX

WHAT, WHO & WHERE: EBS DIRECTS DISCLOSED LIQUIDITY

market is where transactions take place. EBS and Thomson Reuters are the two most commonly at-tributed names in the institutional FX sector, and have been domi-nating banks and institutional trading for over twenty five years. EBS was first established in the early 90s, during the early era of electronic trading as a direct com-petitor to Thomson Reuters, as the main e-trading solution for banks. EBS was a bank-led project which found solace in the dollar-denominated market and created its niche within this segment. On the other hand, Reuters stood its ground in commonwealth de-nominated crosses such as the GBP, AUD and NZD. EBS's main FX solution is its anonymous dealing platform, EBS Markets, a platform which has been competing neck and neck with rival Thomson Re-uters. The anonymous dealing platform connects bank liquid-ity with the trading community. With the rise and sophistication of automated and algorithmic trading, strategies such as high -requency trading have caught traction in the FX markets, how-ever due to a number of incidents

EBS joins its peers in the world of relationship-based trading as par-ticipants want to ensure they know their coun-terparties. The move comes on the back of an evolving marketplace that is influenced by regulations, technology and accessibility.

This article will review EBS Directs entry, its offering and potential market share to evaluate the benefits it can offer in a highly competitive, ever-changing market.

By Adil Siddiqui

ARTICLES02

86

parent firm Thomson Reuters. While EBS Direct does not disclose its trading volumes, Forex Mag-nates believes that volumes on EBS Direct are 30-35% of those that are traded on EBS Markets. Since launching the product, EBS Direct has been performing well, a spokes-person for the firm explained to Forex Magnates in a comment: "The number of liquidity providers and liquidity consumers, as well as our average daily volume, has grown exponentially since launch."

EBS Direct is planning to extend its product range to include emerging market currencies. As EMFX pairs are having greater importance in the global FX markets, with partic-ular emphasis on the Russian ruble and Chinese yuan, the company stated that it will be adding 20 liquid-ity providers from emerging and frontier markets across Asia, CEE and Africa in the coming months.

EBS Direct - Open but Not Anti

EBS Direct is geared towards an

open environment for FX trading, however its not closing its doors to any particular type of trad-ing strategy. When asked about high-frequency trading, Mr. Ward explained: EBS Direct supports relationship trading. If a liquid-ity provider wishes to price HFT models and finds value in their flow, we certainly support this. EBS Directs new functionality highlights the changing nature of the global FX markets whereby

participants such as tier-2 and tier-3 banks are starting to play a more defining role. Additionally, the new functionality is conve-nient for high-speed traders. High-frequency trading accounting for around 20% of daily FX volumes. But for participants who trade on traditional dealer-to-dealer plat-forms such as EBS Markets, trade on large order sizes, EBS Directs smaller ticket size and its distribu-tion of servers are ideal for high -frequency trading firms looking for low-latency order execution. In a report by the BIS on the FX Mar-

Average Daily Volume in USD Billions

Fig 25.

0

40

20

60

80

100

120

140

Jan 14

'

Apr 1

4'

Feb 1

4'

May 1

4'

Mar 1

4'

Reuters FXall EBS Markets EBS Direct

Source: Thomson Reuters, ICAP, Forex Magnates Research

20%FX

50%EQUITIES

Source: Forex Magnates Research

HFT in Financial Markets (Percentage of Total Volumes)

Fig 24.

kets in 2013, EBS was estimated to have around 3035% of volume on its trading platform as HFT-driven. EBS Direct entered the market to join its peer during a revolution-ary era for FX in particular and for financial markets in general. The markets have been bombarded with difficulties: The Libor and FX fixing scandals have placed addi-tional pressures just as the imple-mentation of OTC clearing was finalized. However, in an era of heightened security, transparency and trust, EBS Direct ticks all the boxes for traders transacting in the worlds most liquid asset class, which still needs the re-assurance of a trusted product. Forex Mag-nates believes that volumes will be diverging to relationship-based trading venues and EBS Direct will see 10% year-on-year growth.

ARTICLES02

96

At the end of 2013, UKs Fi-nancial Conduct Author-ity (FCA), sent out a letter

to certain social, or mirror trading platforms providers regarding fu-ture regulatory requirements that may be imposed on such trading methods. The document, which was confidential, was reviewed by Forex Magnates' reporters who in-vestigated the issue in order to shed light on the upcoming changes that can be expected in this field.

Social Trading: Is it a Managed or Self-Directed Account?

Social Trading, or Mirror trad-

ing, is based on the ancient hu-

man tendency to copy whatever

seems to be working for some-

one else. Enabled by recent tech-

nological developments and

internet-based social platforms,

traders can share their activity and

choose to follow each others de-

cisions, which creates a new en-

tity in the eyes of the regulator:

Should followed traders be referred

SOCIAL TRADING REGULATION: COSTS AND BENEFITS OF THE INEVITABLE

to as advisors or signal providers?

It has been nearly a decade since social trading emerged in FX, yet only a Letter of Direction (LOD) was initially needed in order to show that no money manager was using discretions on a clients ac-count, but it was rather the client himself who wanted to use tech-nology in order to copy trades performed by another trader and to mirror them. Since this type of trading wasnt considered a man-aged account nor such that re-quired a power of attorney (POA), a licensed money manager nor a trading advisor, the few platforms offering such social trading sys-tems began growing exponentially.

In the U.S. however, the NFA had

prescribed several risk disclosures

to be used alongside such trading

system results, which should have

been considered as hypothetical

even for real performance when

not all clients had realized those

exact returns. Unlike a managed

account or a hedge fund, in the

Following a letter sent by UKs FCA to some social trading platform provid-ers, the issue of regulat-ing signals markets has surfaced, raising some concerns among indus-try professionals.

This article will examine regulatory developments relating to social trading in order to better un-derstand the future im-plications derived from stringent regulation.

By Steven Hatzakis

ARTICLES02

98

several weeks before this report was published, but was answered with a no comment. As explained to Forex Magnates, the FCA was not commenting at the moment, as it has some complex legal argu-ments to consider and until it has reached an official conclusion. Such an official statement would be published in the near future, the FCA said. But a speech delivered by Clive Adamson, FCA Director of Supervision, in May, can shed some light on how the regulatory body sees its role: We have said that we want firms to put consum-ers and market integrity at the heart of how they run the business. Un-packing this means that we expect firms to treat customers fairly while maintaining prudential strength and achieving an adequate return for their owners. In other words, we don't expect that the interests of customers should be subju-gated either to prudential strength or the interests of shareholders.

Regulation as a Joint Interest

Forex Magnates contacted eToro, which operates one of the largest copy-trading services, providing its technology across the world, to better understand the possible implications that further regula-tion may entail. "eToro welcomes the FCAs interest in copy trading. This interest reflects the impact which social media has made on the traditional ways in which fi-nancial services are delivered to the retail consumer, a spokesper-son for eToro told Forex Magnates. As the world's pioneer and lead-ing player in social trading, and one which is already authorized by the FCA, we look forward

to co-operating with the FCA to ensurea safe and trusted environ-ment for copy traders around the world. We are proud to be autho-rised in the UK which is rapidly becoming the leading center for financial innovation," he added.

On the other side of the globe, Tra-dency, the operator of the Mirror-Trader platform, recently received a specific regulatory approval in Japan to help it best comply with the interpretations of the JFSA. In

an interview with Forex Magnates, Tradency has provided its perspec-tive on the issue, one that is highly valuable given the firms position as one of the early pioneers in this space and its experience with regulators in major jurisdictions.

Tradencys CEO, Lior Nabat, said in an interview with Forex Magnates that the blurred difference between advisory services and social trading is an inherent issue in todays trad-ing enviornment. First of all there is an inherent tension between real financial advisory service and so-

cial media recommendations (as with social networks). Todays tech-nology created a new specie that is not solid, established financial advice nor unrestrained financial social trading but a mix breed. To meet the challenges of this specie requires new set of regulations and protocols, Mr. Nabat explained.

Not only does Tradency welcomes the involvement of global regula-tors, according to Mr. Nabat, but it also sees the new regulation as a joint interest for the regulators, Tradency, brokers and traders. We believe that strong regulation will transform the FX market into a viable financial investment tool. We also see it as an obvious evolutionary step in our evolve-ment into a mass market service.

Regulation will strengthen the strong companies and will make the small unstable companies re-dundant. Tradency is a pure tech-nology company developing a system trading product that is, by design, compatible to the Japa-nese market regulation demands. Mirror Trader users are following automated robots and not human individual traders. Our offering is closer to that of mutual funds or ETF where users select portfo-lio of strategies and have control over the assets management and preferences. This is why Mirror Trader is very different from the social jungle where individuals are coping trading ideas of other individuals, concluded Mr. Nabat.

Not a Buzz Word but a Real Financial Tool

Another early pioneer in the so-

010%20%30%40%50%60%

33%

Jan

40%

Feb

47%

Mar

Apr

56%

May

47%

ZuluTrade 2014 Social Trading Profitability

Fig 27.

Source: ZuluTrade

141

DETAILED BROKER INFORMATION

For The Largest Brokers in Terms of

VolumeFXCM Saxo Bank Alpari OANDA IG Group GAIN Capital CMC FxPro Pepperstone AxiTrader

FXOpen DMM.com GMO Click Securities

Section

03

COMPANIES03

142

Shareholders and Funding: Publicly owned, list of shareholders here

Investments and M&As: data at the end of the report

Reported Net Income in 2012: $9.0 million

Reported Net Income in 2013: $14.8 million

Reported Net Income in Q1 2014: $2.077 million

Market Cap: $1.26 billion (as of June 18th, 2014)

Reported monthly retail volume: $267.7 billion (Average for March, April, May)

Reported monthly institutional volume: $190.0 billion (Average for March, April, May)

Number of active clients: 179,717 (As of May 2014)

Regulation: NFA/CFTC, UK FCA, HK SFC, ASIC, JFSA

Company Name:

FXCMStatus:

Public (NYSE:FXCM)

News in the Past Quarter:

Year Established:

1999

FXCM Launches Volume and Transaction Indicator Read More Here

FXCM Reports May Trading Metrics, Volumes Rise Slightly MoM Read More Here

FXCM Joins the Australian CFD Forum Call to Require Client Funds Segregation Read More Here

FXCM Enters PB Space with Prime of Prime Solution Read More Here

FXCM Releases Info on FXDD Acquisition, $750 Per Account Read More Here

FXCM Retires Active Trader Portal, Enhances Trading Station Read More Here

FXCM Reports Q1 Financial Results and April Trading Metrics Read More Here

FXCM Acquires FXDD US Client Base Read More Here

FXCM March Retail Volumes Fall While Institutional Rise Read More Here

FXCM Launches USD/CNH Pair As Renminbi Interest Builds Read More Here

143

Fig 47. FXCMs share price in past three months:

Fig 48. FXCM Retail vs Institutional Volume ($B)

Source:

$0$100

$300$200

$600$500$400

4/12 5/12 6/12 7/12 8/12 9/12 10/12 11/12 12/12 1/13 2/13 3/13 4/13 5/13 6/13 7/13 8/13 9/13 10/13 11/13 12/13 1/14 2/14 3/14 4/14 5/14

Retail Institutional Total Source:

Apr 14 Jun 14May 14

13

14

15

16

173

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MAJOR NEWS OF THE QUARTER

April May June

Section

04

NEWS04

174

APRIL

Institutional Liquidity LLC (ILQ), the CFTC-registered Retail Foreign Ex-change Dealer (RFED) member FCM regulated with the NFA, is discontinu-ing its business as an RFED, and provided this notice dated April 4th. An internal email announcing the move caught staff by surprise after it was sent prematurely. Its possible that either the NFA or CFTC required the notice be sent out earlier rather than holding off, since the firm knowingly planned to discontinue the license that allows it to hold customer funds, thus in order to provide clients more time to withdraw or move their ac-counts to another RFED. Read the entire article

Exclusive: ILQ Dropping its Retail Foreign Ex-change Dealer License, Trades Will Be Liquidated

UK-based Henyep Capital Markets Ltd. has announced the launch of HY Binary Options, a fully regulated and Financial Conduct Authority (FCA)-licensed company. This launch is of particular relevance to the binary op-tions community given the recent exit by Alpari from the industry over regulatory considerations. Henyep Capital Markets Ltd. specializes in a variety of financial products, including foreign exchange, equities and commodities. With a string of licenses across the UK, Hong Kong and the United Arab Emirates, Henyep Group and its subsidiaries maintain a truly global presence its latest push into the avenue of binary options looks to expand on its already diverse suite of products. Read the entire article

Henyep Capital Markets Ltd. Launches FCA-Li-censed HY Binary Options

Forex Magnates, the leading source for industry news, research and anal-ysis, successfully held its second CEOs get-together group event in Tel Aviv. The event attracted both local and international industry profession-als, including top executives of brokerages, technology developers and service providers. The networking event had a perfect mixture of repre-sentatives from the different segments of the FX industry, including many newcomers who were drawn by the success of the first event. The great atmosphere at the 'cool' venue encouraged collaboration and led to open discussions that are sure to make waves in the future of the FX business, as for example, App developers were seen talking with brokers and financial innovation hub managers met with new technology startups. Read the entire article

Forex Magnates Second CEOs Get-To-gether Group Event in Tel Aviv

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New Zealands Financial Market Authority (FMA), has announced the launch of Phase One in its initiation of new regulations in the country. The new guidelines are expected to lead to sweeping changes in the retail Forex industry due to New Zealand becoming a home for many brokers who wish to enjoy its accommodating process for foreign firms registra-tion. The FMA allows companies to register as foreign-based Financial Service Providers (FSP). As opposed to local firms, foreign FSPs faced re-duced requirements which led to many forex brokers who registered their firms in the country for the appearance of a regulated license. However, as early as February of 2013, the FMA began to crack down on foreign firms by unregistering hundreds of providers who failed to meet minimum re-quirements, specifically in regards to the need for a local physical office and employed Compliance Director located in New Zealand. Read the entire article

There is a new player catering to professional investors among Forex and CFD providers regulated under the UKs Financial Conduct Authority (FCA) WorldWide Markets (WWM) Ltd. has announced the opening of a new office in London, after the regulatory approval of its UK entity WorldWide-Markets Online Trading Ltd. The company has gained FCA authorization only recently and its WorldWideMarkets UK website is already operational. While the company, registered and regulated in the BVI and named World-Wide Markets Ltd., will continue the firms multi-asset brokerage business that includes US exchange traded stocks aside from Forex and CFD offer-ings, the new FCA regulated company under the same brand will cater to professional clients. Read the entire article

New Zealand FMA Ini-tiates New Guidelines, Broker Exodus Ahead?

Exclusive: WorldWideMar-kets Obtains FCA Authori-zation, Targets Professional Clients

FXCM Launches USD/CNH Pair As Interest in Chi-nas Off-shore Renminbi Builds FCA Crushes Hope, Rules On Fraudulent FX Scheme Worth $9.4 Million Exclusive: Cresco FX Adds Hotspot on MT4 as Retail & Institutional Trade Sizes Blurred Exclusive: Danske Bank Launches New Proprietary FX Platform One Trader Technology Provider oneZero Sets Up Pres-ence in Equinix LD4 in UK Thomson Reuters, FXall Trading Volume Set New Record In March FXOpen Begins Marketing Crypto Currency Trading

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