FXCM’s UK unit published a study on its website on Tuesday on the quality of its retail order execution in terms of pricing. According to the document, the retail clients' orders of FXCM UK received better prices than futures or interbank markets, which basically means that the broker’s execution quality saved its clients more than $150 million.
In fact, the broker uses a fiction to illustrate its attractive execution: its prices for retail clients are compared to the ones which would be offered if they chose to be market takers in the same venues where banks and HFTs are market takers. The ECNs compared in the study are leading forex market trading venues – Chicago Mercantile Exchange (CME), EBS and Reuters.
Here are the figures showing the study’s conclusions:
According to the conclusions made from the survey, FXCM was equal to or better than the quoted futures price in 81.34% of the cases, leading to potential savings of $42,529,156 for FXCM’s clients (Average savings per order: $1.02). As regards the comparison with the Interbank market, the broker’s pricing was equal to or better than the quoted interbank price in 94.83% of the cases, leading to potential savings of $114,588,455 for FXCM’s clients (average savings per order: $1.85).
Probably the most important conclusion that can be drawn from this study is that FXCM UK’s retail execution quality saved clients more than $150 million.
This study covers the period from October 1, 2014 to March 31, 2016 and is based on the trade data for UK clients on NDD execution (customers of FXCM Ltd).
Earlier this year FXCM released data from similar studies looking into the quality of execution of the retail orders of clients of Forex Capital Markets LLC for the period between 1 October 2014 and August 31, 2015, according to which the broker’s order execution saves clients over $90 million in 11 months.
FXCM UK explained that its liquidity providers offer better retail prices because they are only allowed to be price makers on retail client stream, and solely a retail client can take a price from the liquidity provider.
Part of the FXCM group, FXCM UK is the trading name of Forex Capital Markets LTD., which is authorised and regulated by the Financial Conduct Authority.
FXCM (NYSE:FXCM) is a leading broker of forex, contracts for difference (CFDs), and spread betting, which serves both retail and wholesale clients. The brokerage is a registered futures commission merchant (FCM) and a retail foreign exchange dealer (RFED) with the US Commodity Futures Trading Commission (CFTC). Apart from its UK unit, it has subsidiaries registered and regulated with the relevant authorities in Australia and France.