5

Editor's Note
Section 1 | Q4 2013 Forex Market Overview

Forex Market Quarterly Overview
Institutional FX Volumes Review
Retail Forex Volumes
Retail Forex Volumes By Account
Retail Forex Volumes By MT4 Usage
Exchanges Update
Binary 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 trading
The Inexact Science Of Social Marketing
Reaching the Other Billions: The Case of FX on Chinese Social Media
New Zealand Country Report: Regulation as a Game Changer?
What, who & where: EBS Directs Disclosed Liquidity
Region-Based FX Liquidity: Trend of the Future or a Pipedream?
Social Trading Regulation: Costs and Benets of the Inevitable
Between the EU and Russia: Ukraine Country Report
Single Bank Platforms: Stay Ahead of the Rest
Sentiment 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 Report
Japan: 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
7
12
16
20
22
24
28
32
38
44
50
56
62
68
74
84
88
96
100
108
112
120
126
132
141
168
173
CONTENT
INDEX
9
MARKET
OVERVI EW
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
OVERVIEW 01
H
alfway through the year,
most players in the for-
eign exchange industry
have realized that 2014 is going to
be much diferent 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 protability 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 xing
manipulation, but primarily a re-
sponse to decreased prot oppor-
tunities in the market. While not
afecting 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 afect-
ing currency markets has always
been central bank policies. When
G7 decision makers continue their
crusade against seemingly low in-
ation, 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 rst quarter of 2014 was widely
afected by the Russian-Ukrainian
geopolitical spat and the Federal
Reserve tapering efort. 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-
ation 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 ina-
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 rst 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 Pacic, the Japa-
nese economy has been hit with
a sales tax hike that came into
efect 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 lled with friction, as even af-
ter downloading an app, users still
have to create an account and con-
rm 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
nd 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 of. MT4 and MT5 code
has been altered so they are more
similar than diferent 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 ofer the platform
which could nally sway enough
developers and traders to make the
switch from MT4 to MT5.
IPO Challenges
Leading payments solutions pro-
vider, Safecharge, has led 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 of 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 eforts 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 rm'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-
cer Drew Izzo.
While OANDAs personnel shifts
indicate the companys strive for
an overall change in strategy, other
industry participants are under an
43
ARTI CLES
Low 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
ARTICLES 02
44
F
X 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 ve
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 of to mark
its post 2008 nancial 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 ows
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,
ofering 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-
ticially low. Its difcult 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 uctua-
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 diferent
asset classes and with a continu-
ous drop in trading costs, the new
direction should be ofering di-
versication. Not all Forex trading
companies have added indices and
commodities to their ofering 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 afected 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
condence 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 diferently?
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
Ofcer and Deputy Chief Tech-
nology Ofcer, Dimitry Kukels.
Range of Major Currency Pairs (in Pips)
Source: Forex Magnates Research
2,000
500
0
1,000
1,500
2,500
3,000
3,500
E
U
R
U
S
D
G
B
P
U
S
D
U
S
D
J
P
Y
A
U
D
U
S
D
E
U
R
J
P
Y
Fig 6.
2009 2010 2011 2012 2013 2014
1
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5
7
4
3
,
2
4
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,
4
3
4
2
,
0
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8
ARTICLES 02
56
T
he 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 ve 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 signicant
French inuence. 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
benet 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 afect-
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 ame
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 signicantly 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 million
GDP $ billion: 191
GDP Per capita $: 57,000
Stock Exchanges:
Casablanca Exchange
Daily Volume $ million: 4.5
Internet Users: 16m
Facebook Users: 5.5m
Key Facts
Population: 38 million
GDP $ billion: 302
GDP Per capita $: 76,000
Stock Exchanges:
Algeria Stock Exchange
Daily Volume $ million: 2.3
Internet Users: 5.5m
Facebook Users: 4.2m
Key Facts
Population: 6.2 million
GDP $ billion: 76
GDP Per capita $: 11,300
Stock Exchanges:
Libya Stock Market
Daily Volume $ million: 0.06
Internet Users: 1m
Facebook Users: 0.78m
Key Facts
Population: 10 million
GDP $ billion: 48
GDP Per capita $: 91,000
Stock Exchanges:
Bourse de Tunis
Daily Volume $ million: 0.2
Internet Users: 4.1m
Facebook Users: 3.2m
North Africa Key Facts Fig 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
ARTICLES 02
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
diferent 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 ve years.

EBS was rst 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 inuenced by
regulations, technology
and accessibility.
This article will review
EBS Directs entry, its
ofering and potential
market share to evaluate
the benets it can ofer
in a highly competitive,
ever-changing market.
By Adil Siddiqui
ARTICLES 02
86
parent rm 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 rm 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 nds value in their
ow, 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 dening 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 rms 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
J
a
n

1
4
'
A
p
r

1
4
'
F
e
b

1
4
'
M
a
y

1
4
'
M
a
r

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
nancial markets in general. The
markets have been bombarded
with difculties: The Libor and FX
xing scandals have placed addi-
tional pressures just as the imple-
mentation of OTC clearing was
nalized. 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.
ARTICLES 02
96
A
t 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 condential, 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 eld.
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
ofering 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
ARTICLES 02
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 ofcial conclusion.
Such an ofcial 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 rms to put consum-
ers and market integrity at the heart
of how they run the business. Un-
packing this means that we expect
rms 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 reects the impact
which social media has made on
the traditional ways in which -
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
nancial innovation," he added.
On the other side of the globe, Tra-
dency, the operator of the Mirror-
Trader platform, recently received
a specic 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 rms 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 diference 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
nancial advisory service and so-
cial media recommendations (as
with social networks). Todays tech-
nology created a new specie that
is not solid, established nancial
advice nor unrestrained nancial
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 nancial 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 ofering
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 diferent 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-
0
10%
20%
30%
40%
50%
60%
3
3
%
J
a
n
4
0
%
F
e
b
4
7
%
M
a
r
A
p
r
5
6
%
M
a
y
4
7
%
ZuluTrade 2014 Social Trading
Proftability
Fig 27.
Source: ZuluTrade
141
DETAILED BROKER
INFORMATION
For The Largest
Brokers in Terms of
Volume
FXCM Saxo Bank Alpari OANDA IG Group
GAIN Capital CMC FxPro Pepperstone AxiTrader
FXOpen DMM.com GMO Click Securities
Section
03
COMPANIES 03
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:
FXCM
Status:
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 14 May 14
13
14
15
16
173
sales@leverate.com
www.leverate.com
Leverate's award-winning technology gives your business
the edge that it needs to rise above the competition.
Join the elite club of the world's top Forex brokerages
that trust Leverate.
All the latest & greatest FX solutions from
Award-winning trading environments to
Zero-like spreads...
...and other kick-ass products like
branded seamless social trading
environments for web, mobile &
tablet, ultra-fast algorithmic data-
feeds, risk management systems,
regulated liquidity, crm, business
intelligence, and a few top-secret
projects that all work in perfect
harmony to make sure that your
brokerage has an edge above
the competition.
MAJOR NEWS OF
THE QUARTER
April
May
June
Section
0
4
NEWS 04
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 staf 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 of, since the rm 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 nancial 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 diferent segments of the FX industry, including many
newcomers who were drawn by the success of the rst 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 nancial
innovation hub managers met with new technology startups.
Read the entire article

Forex Magnates
Second CEOs Get-To-
gether Group Event in
Tel Aviv
175
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 rms registra-
tion. The FMA allows companies to register as foreign-based Financial
Service Providers (FSP). As opposed to local rms, foreign FSPs faced re-
duced requirements which led to many forex brokers who registered their
rms 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 rms
by unregistering hundreds of providers who failed to meet minimum re-
quirements, specically in regards to the need for a local physical ofce
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
ofce 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 rms multi-asset brokerage business
that includes US exchange traded stocks aside from Forex and CFD ofer-
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
Keep Your Eyes On:
Some more stories that
you may have missed
but are worth watching