Broker News

The Japanese binary options market could be due for an upheaval according to one financial newspaper, the Nikkei, which said recently that a framework for regulating binary options has already been decided. Though there has been no official word from the Financial Services Agency or the Financial Futures Association or from the opinion makers within the binary options industry, those in the know believe that the Nikkei's observation has some validity and will likely include a number of rule changes which will prohibit some options trading which are available elsewhere, as well as offer various consumer protections. For example, it is believed that specific types of binary options will not be permitted, such as High/Low types which are generally seen more as gambling rather than financial trading. Short term options, i.e. less than 60 seconds, will also likely be prohibited. Protections are likely to include limitations for trade volume and maximum daily loss per trader, as will spread options. Furthermore, binary options brokers will be required to make disclosures regarding profits and losses as well as their rationale for halting trade on certain types of options.

Brian Twomey is a full-time trader, author of "?Inside the Currency Market" published by Wiley and a new upcoming book, "?Using the Z-Score to Trade Foreign Exchange and Other Financial Instruments". Brian has a very unique self-developed method of applying statistical analysis, and in particular Standard Deviation calculations, to plan his trades.

There could be tough times ahead for brokers in the forex industry given the precedents; since the beginning of the year, several forex brokers have made the decision to shut their doors and close up shop; GFT is just the latest in a string of forex broker-related closures or restructurings. Earlier this week, GFT had reported that it was pulling out of the U.S. and Japanese markets, a move that the company's management called "?strategic repositioning." In other words, the head of GFT said that in those markets they will focus primarily on institutional investors and to that end will be shifting their U.S.-based retail trade to another broker, "?trusted partner," TD Ameritrade; likewise, the Japanese retail trade will be handed over to a Japan-based partner.

It's an issue that's been discussed before: how the protection of U.S. consumers with punitive fines for brokers and more stringent regulation infringes on Forex-related business activity. Those usurious fines and the increasingly tighter rules by the National Futures Association (NFA) resulted in a number of U.S.-based brokers like Advanced Markets and Forex Club making the decision to downgrade their operating license to Futures Commission Merchants or FCMs. The downgrade from the previously held RFED license that permitted retail trade meant Forex brokers were allowed only to accept only institutional investors.

Industry figures indicate that there is an ongoing fight among brokers attempting to survive what is fast shaping up to be a Forex bubble. In the Eurozone, there is an over-saturation of brokers, partially caused by the ease with which it's possible to get regulated in areas like Cyprus, and in the U.S. because of the NFA's regulation (some might say the over-regulation) of the trading environment there is a strong need for brokers to seek out creative and alternative solutions to increase their customer base. Some brokers have relied on new technologies or products to draw in new customers, while other brokers have been forced to streamline their operations or reduce their offerings to improve their bottom line. Many believe that the answer to brokers' success will lie not in expanding their product offerings and services, but by expanding their geographic borders. What's left to consider outside of the Eurozone and the U.S. is South America, Asia and Africa, all of which represent great opportunities for Forex brokers, but clearly they will not come easy.

The Forex industry is abuzz with talk that former iForex before making the decision to start his own brokerage.

Early last week, Swissquote, which acquired AC Markets (Advanced Currency Markets SA), announced that it would be expanding its reach into Europe by opening up an office in Malta. According to the Board Chairman, Marc B?¼rki, their decision to branch into Europe came as a result of a huge demand from European traders who wanted to trade FX with them, but were previously unable to do so.

Earlier this month Metaquotes Software made some improvements to the MetaTrader 5 platform, aka the MT5, which added the Trading Signals service to the platform. Now, Metaquotes has done the same for the brokers and end users of the much more broadly used MetaTrader 4 (MT4) platform as well. Many of the largest brokers, including AVAFX, FXCM, Markets.com and Easy-Forex, provide the MT4 platform for their clients. MT4 allows forex brokers to give their clients live streaming prices and access to charts, as well as the ability to place orders and manage their trading account.