The FXCM (NYSE:FXCM) brokerage released data from own studies looking into the quality of execution of the retail orders of its clients. Based on the data, FXCM claims that its retail order execution is better than if the same orders were executed on the futures market or the interbank forex market, hence it offers better prices for its clients.
The more detailed information reveals that in 90.83% of the cases the FXCM clients who were trading CFDs got a better price (86.47% of the occasions) or an equal price (4.36% of the cases). Only in 9.17% of the cases the traders would have gotten a better price if they were trading futures on the largest options and futures exchange in the world – Chicago Mercantile Exchange (CME). The better or equivalent prices of the CFDs offered by FXCM led to potential savings of $36 350 525 for its clients. The average savings per order was $2.04 and the number of orders included in the study was 17 855 552.
FXCM's prices scored even better in comparison to the interbank forex market. The study data shows that it offered to its clients a better or equal price in 95.31% of the occasions. In 92.19% of the times the price was better, compared to the spot equivalent on the interbank market and in 3.12% it was equal. Only in 4.69% of the cases the interbank price was better than that of FXCM. Thus the broker's clients potentially saved $55 121 988. The average savings per order was $1.94 and the number of orders included in the study was 28 378 957.
According to the methodology, the study was conducted in the period between 1 October 2014 and August 31, 2015. It is based on the history orders of the Forex Capital Markets LLC clients on non dealing desk (NDD) forex execution. The assumptions made during the study were in favour of the futures and interbank market prices, provided by three of the largest trading venues – CME, EBS and Reuters and were compared to the FXCM order execution prices. The goal of the study was to show how different trading venues are better suited for different customer segments.
“We wanted to explain why FXCM’s liquidity providers provide better pricing on our retail trading platform for retail clients,” said Drew Niv, FXCM’s CEO, quoted in the company press release.
Last month one of the larger competitors of FXCM – FxPro – announced an increase of its negative slippage to 24.8% in Q4 2015, while in Q3 2015 it was 17%. In Q4 2015 FxPro's trades executed with positive slippage plunged to 37.5%. In Q3 2015 it was 43.4%. The at quote execution in Q4 was 37.7%.
The December 2015 execution statistics scorecard of Forex.com shows that its positive slippage in the month was 64.19%. The average positive slippage for Q4 2015 was 64.01%. In the preceding quarter the average positive slippage was higher – 67.1%.