FXCM UK has recently published a study on its website that examines the quality of its retail order execution. The broker claims that its retail clients’ orders received better execution, in terms of prices, than futures or interbank markets.
In order to illustrate its attractive pricing, FXCM UK uses a fiction: 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 the leading forex market trading venues – Chicago Mercantile Exchange (CME), EBS and Reuters.
Here are the figures showing the study’s conclusions:
According to the study, 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).
So, FXCM study shows that its retail execution quality saved clients more than $150 million.
This study is based on the trade data of clients of FXCM UK on NDD forex execution and covers the period from October 1, 2014 to March 31, 2016. What is more, the Futures market data used includes only limited number of currency pairs, however, some of the most heavily traded: EURUSD, GBPUSD, AUDUSD, NZDUSD, USDCAD, USDCHF, and USDJPY.
Meanwhile, the broker clarifies that its study is not suggesting that FXCM is better than any of the famous institutional venues mentioned above, but rather that different customer segments are better suited for different venues. In particular, retail clients are better suited for trading environment and platforms where liquidity providers are able to offer lower pricing, while for institutional clients it is more appropriate to compete with each other at the large venues like CME, EBS, and Reuters.
In comparison, Cyprus-regulated forex broker ForexTime (FXTM) recently announced execution statistics for six months, ended 31 May, 2016, according to which positive slippage rate exceeds 80%. Leading EU broker FxPro has also published execution statistics for Q1 of 2016 earlier this year, which show that the 47% of trades were executed with positive slippage.
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.
Earlier in February, FXCM published a similar study on quality of execution, covering the period from October 1, 2014 to August 31, 2015.