According to its latest press release with October 2020 metrics, US-based online brokerage Interactive Brokers (Nasdaq: IBKR) has surpassed 1 million active clients across its trading platforms. This is a new record for the 42-year-old company and highlights the success many online brokerages have had this year amid extreme market volatility and disruptions caused by the Covid-19 pandemic.

Among other things the broker reported a 10% drop in daily average revenue trades, or DARTS from 1.953 million in September to 1.762 million in October, signaling a slowdown in trader activity as we approach the US Election, which is taking place today. Nonetheless, the reported DARTS metrics are still 120% better than those achieved in October 2019, signaling the rise in popularity of equities trading in the United States and elsewhere.

Interestingly, the broker reported that it charged an average of $2.49 in commissions for trade orders, which includes exchange, clearing, and regulatory fees. This indicates that although “commission-free” trading is here to stay for major online equities shops in the United States, their revenue generation is still diverse among other product groups:

 

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November 2nd, 2020: The Financial Commission today announces that the membership status of Trade99 has ceased following a voluntary withdrawal.

Trade99 had met its obligations as a Financial Commission member up until October 30th, 2020, when its membership was effectively withdrawn.

Financial Commission notes that it will not be able to process any new complaints from Trade99, following its voluntary withdrawal of membership from the Financial Commission as of October 30th, 2020, and moving forward or until membership is approved again.

Furthermore, Trade99 clients will not be eligible for reimbursement from Financial Commission’s compensation fund as a non-member, since the compensation fund can only be used by clients of approved members, and subject to the ruling by our Dispute Resolution Committee. The compensation fund is designed to help protect members’ clients in exceptional cases and is funded by the Financial Commission from a portion of membership dues.

An updated list of current and prior members can be found on FinancialCommission.org, including members that have either been expelled or withdrawn voluntarily.

Financial Commission is a leading independent self-regulatory organization whose members include online brokerages and exchanges, across Forex, CFDs, derivatives and cryptocurrency markets, as well as certified providers and developers of trading platform technology used by members and their end-clients who are retail traders and investors.

Financial Commission requires that member firms strictly adhere to membership rules to maintain good standing on an ongoing basis. To learn more about our membership requirements and certification process, contact us or visit  https://financialcommission.org

UK-based online contracts for differences (CFDs) broker Plus500 has published a trading update a few days ago announcing its 3Q 2020 financial performance. The results suggest solid growth year over year, but a slowdown from the record metrics achieved earlier in 2020, as market volatility has subsided from extreme levels.

Revenues generated in the third quarter totaled $216.4 million, a 96% jump as compared with the same quarter of the previous year, but a significant decline from the $316.6 million generated in 1Q 2020 and $249 million in the second quarter. EBITDA during Q3 2020 rose 91% percent year over year to $134.2 million.

The broker’s metrics suggest a slowdown in trader activity and interest in trading as 2020 has progressed. The broker continues to bring on thousands of new traders every quarter, but that number has steadily declined since Q1 2020. Last quarter the brokerage added 46,238 new accounts, which is a 90 increase from the same time last year.

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The Cyprus Securities and Exchange Commission (CySEC) announced today that it has reached a settlement and fine with Key Way Investments Ltd. The company currently maintains a Cyprus Investment Firm (CIF) registration and thus must abide by the regulator’s decision.

The regulator indicated in their notice that the enforcement action stems from “possible violations of The Investment Services and Activities and Regulated Markets Law of 2017(“the Law”). More specifically, the onsite inspection taking place in June 2019 for which the settlement was reached, involved assessing the Company’s compliance.”

As indicated by Finance Magnates, the fine “was for non-compliance with Article 5(1) of the Law, regarding the requirement for CIF authorization and Article 22(1), which concerns certain authorization conditions and organizational requirements with which a CIF is required to comply. CySEC has further explained that the financial penalty was also imposed for non-compliance with other articles that cover multiple regulatory requirements, including conflicts of interest, the information provided to clients, and certified persons.”

The company is expected to correct any issues related to the enforcement action, but clients of the company should be aware of the lapses identified by the regulator in order to ensure their future dealings with the company and personal funds are not at risk.

In the motion filed with the New York Southern Court, attorneys of plaintiffs in a class-action lawsuit against Global Brokerage, Inc., formerly known as FXCM Inc. indicated that some 35 more investors can be eligible to join the lawsuit going forward.

The lawsuit filed several years ago focuses on FXCM’s relationship with Effex Capital and accuses the former US online broker giant of securities fraud and by falsely representing its purported agency-trading model with Effex Capital.

The motion filed in court suggests a total of 83 companies who held FXCM Notes during the period of alleged misconduct. Of those, 35 firms have been identified as being eligible according to the plaintiff’s counsel, including a variety of trusts and insurance companies.

The information was gathered using Bloomberg data and the plaintiffs indicated that “there is reason to believe the true number of class members may be greater because the Bloomberg data are not comprehensive… thus, the Bloomberg data provide a floor, not a ceiling, for the number of potential FXCM Notes subclass members.”

As such, the already long legal battle may expand for an unforeseeable amount of time and present further issues to Global Brokerage, Inc.

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US-based online brokerage Interactive Brokers has published its 3Q 2020 financial results, indicating some good short term results that indicate momentum in trading following the summer lull and Covid-19 impacts.

The broker reported net revenues were $548 million and income before income taxes was $334 million this quarter, compared to net revenues of $466 million and income before income taxes of $281 million for the same period in 2019, according to the financial statements. Adjusted net revenues were $518 million and adjusted income before income taxes was $304 million this quarter, compared to adjusted net revenues of $525 million and adjusted income before income taxes of $340 million for the same period in 2019. The year-over-year difference in adjusted net revenues represents a small drop of just -1.3%. Profit wise the brokerage saw a 10% decrease in metrics year over year.

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Canadian-based online brokerage OANDA Corporation continues to battle New Jersey-based GAIN Capital Group over patent infringement allegations brought by OANDA several months ago. According to media reports, OANDA has filed a motion to dismiss claims made by GAIN Capital in its attempt to file a stay order to the proceedings.

OANDA filed the lawsuit earlier this year alleging violations of its patented technologies, specifically, US Patent Nos. 7,146,336 (“the ’366 patent”) and 8,392,311 (“the ’311 patent”). The original claim stated, “defendants have infringed one or more claims of the ʼ336 Patent by making, using, selling, offering for sale, or selling products and/or services that meet each of the limitations of one or more claims of the ʼ336 Patent.”

For its part, GAIN indicated in its proposed stay order that OANDA had some seven years to file its grievances since that is when the last Asserted Patent was issued to the company. Furthermore, GAIN indicated its strong belief that the products or services in question will ultimately be found to be unpatentable as a result of any actual trial proceedings.

It remains to be seen if OANDA Corporation actually does have a valid claim in this case, as the services which allegedly violated the patents are unique to operations of Forex online brokers, who oftentimes use the same or similar third parties in the execution of such services, making them common among the industry’s major brokers.

The European Securities and Markets Authority (ESMA) has surprised industry participants in its latest publication questioning the need for best execution practices (including RTS 27 and 28 reporting) considering the current disruptions with Coronavirus around the world. The regulator previously gave companies a break by providing an extension of deadlines for submitting the best execution data.

Now ESMA is considering scrapping the reporting requirements altogether saying in its publication that “reports are rarely read by investors, evidenced by very low numbers of downloads from their website. It is, therefore, assumed that investors cannot or do not make any meaningful comparisons between firms on the basis of this data.”

The regulator indicated that in their mind the suspension of RTS reporting requirements will not “lead to a decrease of consumer protection since investors currently do not read the reports at all.”

Considering any possible stoppage to reporting requirements, which will only be considered at some point in 2021 by the European Commission, traders will still have the opportunity to review their execution prices and compare them with the broader market using services like VerifyMyTrade and Tradefora.

UK based CMC Markets posted a trading update indicating solid performance for the first half of fiscal 2021 (current 2020) ending September 31st. The company indicated it has generated approximately £200 million in revenue from the CFD trading business, which is a strong improvement from £85 million generated in the same period last year.

The broker also indicated that “stockbroking net revenue is expected to increase to approximately £26 million for H1 2021 (H1 2020: £14 million), mainly as a result of the continued growth across the business, reflecting the strengthening of the ANZ Bank white label partnership, as well as more volatile markets leading to increased client trading activity.”

While operating costs are due to increase to approximately £80 million, the company’s forward guidance suggests that the full-year figures will end up to be at the top of the range of current consensus with operating income of £329.9 million, ranging from £321.0 million to £348.7 million.

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The latest figures from the Commodity Futures Trading Commission (CFTC) for Futures commission merchants (FCMs) and retail foreign exchange dealers (RFEDs) highlight a drop in retail deposits from clients in August of 2020. Of the five prominent brokers accounting for most of the market share in retail FX trading in the United States, only two reported a slight increase in deposits.

The decline witnessed in the last month of summer comes as more and more traders are flocking back to opportunities in the US equities markets, fueled by little to no trading fees and commissions offered by the popular US equities brokers, such as Robinhood and Charles Shwab. Nonetheless, relative newcomer, IG US was able to post a slight increase of $191,026 in deposits, while TD Ameritrade grew by $385,751 or 1% of their total deposits.

GAIN Capital, Interactive Brokers, and OANDA all experienced drops in deposits of -1%, -9%, and -2% respectively in August 2020. The change in monthly deposit totals did not affect the current market share of brokers, with GAIN Capital still nudging out OANDA for the top spot with 38% of all client deposits at US RFEDs.

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Approved broker member AxiTrader has completed a rebranding process to reflect on its global expansion and multi-asset trade offer. The broker has also announced in a press release that it has launched a new funding program called Axi Select, which provides “talented retail traders with an equal opportunity to become full-time professional traders.” In addition, the company has announced a sponsorship with the Manchester City football club in the United Kingdom.

The Axi Select program is at the core of Axi’s offering and one of the significant components in the new brand’s message of ‘trading your edge,’ according to the press release. The broker indicated that it had allocated over $10 million to traders who have entered the program. Under this unique program, Axi provides retail traders with the necessary tools – including an Artificial Intelligence-backed performance analysis platform called PsyQuation – plus the funding to get them on the path to professional trading. In this way, the company is helping traders “realize their ambitions.”

Rajesh Yohannan, CEO at Axi, said: “We have introduced a lot of innovation over the past few years – a more robust platform and a wider range of products for our clients around the world. This rebrand to Axi reflects our continuing efforts to deliver the trading edge for every trader.”

The deal with Manchester City is the company’s first partnership with a sports team. It will help the company create a global awareness for its new tagline ‘Trade your edge’ through high-profile placements within the Etihad Stadium, on the City website, and also through activations with customers and fans online and at events with a range of exclusive offers and promotions.

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Certified education provider, BigBrainBank.org has announced the launch of new trading signals using AI-powered analytics and algorithmic trend monitoring. Its goal is to build a global ecosystem that focuses on financial literacy with an education platform that supports the capital markets, financial corporations, and retail investors.

Known as “TheBrain,” the software is Asia’s first AI-powered financial advisor. The algorithmic system in BigBrainBank.org offers users an excellent user interface and seamless navigation to extract important metrics in trend analysis and identify trade ideas with higher success rates and risk management measures in place.

BigBrainBank also offers a learning platform that includes a professional and lucrative pathway for those who desire to establish careers in the currency marketplace while honing practical and applicable know-how. The education system is embedded within a blended learning methodology that combines offline and online learning with the flexibility of global learning mobility for international students and subscribers.

The popular UK registered CFD broker and technology provider Plus500 has published a trading update today ahead of its annual general meeting (AGM) indicating continued momentum into the second half of 2020. The company indicated it is “making excellent progress across all key commercial and financial performance metrics. This performance has been primarily driven by the strength and differentiation of the Company’s proprietary technology.”

Revenue, in particular Customer Income, has remained strong in H2 2020 to date, supported by further growth in the Company’s Active Customer base. The Company has also on-boarded a high level of new customers so far in the second half, driven by continued investment in its marketing technology, rapid response to market events, and attractiveness of the Group’s market-leading mobile and tablet offers.

Plus500 is confident that “While market conditions remain uncertain, macroeconomic and sector-specific newsflow continues to provide significant trading opportunities for customers.” The broker will publish its results for Q3 2020, for the period ended 30 September 2020, on 27 October 2020.

As we indicated previously, it is important for brokers to take advantage of technology, marketing, and customer engagement to extract valuable revenue from the thousands of new traders that joined the markets earlier this year at the height of Covid-19 impacts. Plus500, at least as indicated in the trading update, looks to be doing just that.

It seems like many European FX brokers are interested in mainstream sports these days. Financial Commission approved broker members are no strangers to sponsorship opportunities, with SamTrade FX becoming the latest trusted broker to sponsor a UK football club.

The company announced that it has become the official forex and online trading partner of English football club Wolverhampton Wanderers FC, popularly known as Wolves, for the upcoming 2020-21 season. According to the deal, Samtrade FX’s branding and logo will be featured on the club’s press conference backdrop, LED boards, and also on the club’s official app.

In August SamTrade FX also announced plans to sponsor Cardiff City Football Club in a two-year partnership that runs from the current 2020/2021 season. Cardiff City competes in the Championship, the second tier of the English football league system.

The agreement marks the first foray into sports sponsorship for Samtrade FX, which announced in July that it had secured licenses from the UK’s FCA and Australia’s ASIC.

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