The Betfair Group IPO was initially mooted back in 2005, but was then put back on the shelf. On September 21st Betfair announced that they intended to list their shares on the London Stock Exchange and last week the prospectus was published at long last, informing any interested readers that:
Conditional dealings in the Shares are expected to commence on the London Stock Exchange at 8.00 a.m. on 22 October 2010. It is expected that Admission will become effective, and that unconditional dealings in the Shares will commence at 8.00 a.m. on 27 October 2010.
Initial guidance on the offer pricing stated that:
The indicative price range of the Offer has been set at between £11.00 and £14.00 per Share, which is equivalent to an equity value for Betfair of between approximately £1.16 billion and £1.48 billion based on its issued share capital. This indicative price range is expected to make Betfair eligible for inclusion in the FTSE 250 Index in due course.
More on Betfair IPO a Success. Will FXCM Succeed Where GAIN Did Not?
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Now that yesterday's excitement has died down a bit I had a chance this morning to chat to LMAX in greater detail about their new retail trading platform, recently christened LMAX Trader.
First of all note the following points extracted from the LMAX Trader Trading Manual:
We provide direct access to prices on instruments (for example, UK100 and GBP/USD) being offered on the LMAX multilateral trading facility (“the MTF”). You trade with us as principal and not as agent on your behalf on the prices we obtain on the MTF.
We process each order you place with us by placing an identical order (referred to as “our Back to Back Order”) on the MTF. Upon our Back to Back Order being matched by other traders or filled by a market maker on the MTF, we shall open or close a trade on the MTF (which is known as a “Back to Back Trade”). A trade will then be opened or closed on your account at the same price and in the same size as our Back to Back Trade. This is in essence how our trading service operates.
The prices on the MTF are constantly changing and we do not guarantee that the price you see when placing an order will be the price at which you trade is executed.
Our Back to Back Order submitted to the MTF will mirror the order that we have accepted from you. We cannot guarantee that our Back to Back Order will be matched or filled on the MTF. Our ability to open or close a trade on your account is entirely dependent on our ability to execute our Back to Back Order on the MTF. It is only when our Back to Back Order is matched or filled on the MTF that a trade will be opened or closed on your account Factors such as the quantity of your Order and liquidity available in the instrument you wish to trade will impact whether our Back to Back Order can be executed. It may therefore not be possible to open or close a trade on your account immediately.
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First there was Betfair. Then came Tradefair. Today there is LMAX Trader, which has just been launched amid a flurry of publicity, it's mission "to transform retail contracts for difference (CFD) and FX trading". In the press release LMAX chief executive Robin Osmond is quoted as saying:
The current broker-led model for online trading of CFDs and FX is outdated and doesn't work to directly benefit the customer as the interests of parties are not aligned. We are bringing transparency and fairness to the market by providing an exchange platform and a business model that clearly wants its retail traders to be as successful as possible. For the first time, retail CFD and FX traders can access an open order book with wholesale institutional liquidity across a wide variety of asset classes with all the protections you would expect. LMAX offers traders the ability to make a market rather than be passive takers of broker prices.
More on LMAX Trader Launched to "Transform Retail FX Trading"
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Following the recent release of their forex trader profitability statistics, Jason Rogers of FXCM has written a guest post for us on the topic of the moment – "Why have traders been unprofitable"
FXCM is proud of our agency model using No Dealing Desk execution and it means traders are trading in a fair and transparent market without their broker playing games. Because of this traders don’t have to deal with requotes, dealer intervention, or restrictions on stops, limits, and entry orders which a dealing desk uses to protect their interests over the traders interests.
While NDD provides what we believe is a more transparent trading experience, NDD cannot help traders pick the correct market direction. It is not a signal generator telling you when to buy and sell and in what direction. What it will ensure is that when you want to enter or exit trades, you won’t have to play games with your brokers dealing desk.
Why have traders been unprofitable?
FXCM actually shows you why the majority of retail traders have been unprofitable in the Speculative Sentiment Index (SSI). SSI shows net positioning of retail traders for the major currency pairs. This means it will display how many long positions there are compared to short positions.
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Just in case you hadn't noticed, today is October 18th 2010. Today is the day that all those new CFTC regulations come into force, and when a forex trader opens a new account brokers must now reveal to them quarterly account profitability statistics covering the previous year. FXCM have done just that, and here are their numbers:
| Quarterly Report | % Profitable | % Unprofitable | Total Non-Discretionary Accounts |
| Sep – Dec, 2009 | 26% | 74% | 22,371 |
| Jan – March, 2010 | 25% | 75% | 19,049 |
| April – June, 2010 | 23% | 77% | 17,771 |
| July – Sep, 2010 | 23% | 77% | 15,023 |
Comparing FXCM's profitability statistics with Interbank FX's that we published last week reveals firstly that FXCM's clients seem to be slightly less profitable than Interbank's, with an average of 24.25% against 29%. Secondly FXCM has slightly more active non-discretionary accounts, a quarterly average of 18,554 against IBFX's 17,525. Note that FXCM's figures include only accounts with FXCM LLC. I anticipate that FXCM's figures will increase far more than Interbank's for the final quarter of 2010, when lots of dollars that left the United States in search of a balmier forex trading climate on this side of the Atlantic are forcibly repatriated courtesy of the CFTC.
More on FXCM Release Extra Forex Trader Profitability Statistics
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Michael Greenberg posted an article over on ForexMagnates.com earlier today stating that:
MIG Bank – due to their bank status they will be able to accept US clients despite latest CFTC rules. The situation is not very clear for all offshore brokers now but MIG Bank were the first to announce publicly that they will be accepting US clients at least until July 2011.
I've been on the phone to Switzerland most of today trying to get confirmation of this report. I've even sent a few emails to MIG also, but I have yet to receive from them any clarification or confirmation of Michael's report.
Whilst I was at it I also called and emailed another Swiss bank, Dukascopy, to try and discover if they were prepared to clarify what their position is regarding existing or future US domiciled clients of theirs following the October 18th deadline for the introduction of the final CFTC rules concerning the regulation of retail spot forex in the United States. Again, I have yet to receive a reply.
More on Swiss Banks to Accept US Clients After CFTC Deadline?
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The National Futures Association has just issued additional guidance to it's members about the CFTC's Final Forex Regulations. In its latest notice to members the NFA says that:
NFA staff has received a number of inquiries from Members seeking further guidance and clarification on certain requirements. Based on further consultation with CFTC staff on Friday, October 8th, this Notice provides additional guidance on the following areas:
- Risk Disclosure Statement Required by CFTC Regulation 5.5
- Qualifying Institutions for Holding Assets Equal to Retail Forex Obligation
- IB, CPO and CTA Registration
- Other Registration Issues
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Ray the Random Robot™ has just entered yet another forex trading competition. This time it's the Myfxbook/FXOpen October 2010 MetaTrader 4 ECN Trading Championship. This championship doesn't actually start until October 25th, so Ray is actually ahead of the curve on this one for a change! However one the rules of the competition states that:
A demo account must be opened with FXOpen and be connected to Myfxbook.
More on Ray the Random Robot's Results are now Live on Myfxbook
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As we pointed out recently, the new CFTC regulations require all US spot forex brokers to use a much longer risk disclosure statement from October 18th 2010. As part of that risk disclosure:
The final rules retain the requirement for RFEDs and FCMs that engage in retail forex transactions to disclose on a quarterly basis the percentage of non-discretionary accounts that realized a profit and to keep and make available records of that calculation.
Although it is not yet displayed on their website, Interbank FX have already emailed their existing clients details of their newly revised risk disclosure statement, including those profitability numbers. Here they are:
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It's been an extremely busy week for Ray the Random Robot™, and he has undergone a number of cloning operations. First of all the MetaTrader 5 Automated Trading Championship 2010 finally got underway at midnight on Sunday, Moscow time. Ray's multi-currency MT5 clone started perfectly, but he has had some teething troubles with EUR/USD and has now slipped back to 273rd position out of 314.
Ray's multi-currency MetaTrader 4 clone is currently doing much better than that. Ray got very excited at the idea of being able to attend the Abu Dhabi Formula One Grand Prix on an all expenses trip paid for by MIG Bank, so he made a last minute entry into their FX Grand Prix trading contest, which started at exactly the same time as the MT5 championship. He was quite happy this morning to discover he had already made 10% profit in less than a week. Then he checked the leaderboard and got very depressed. The current leader, who appears to be a human called Rick, is up 297%!
More on Ray the Random Robot Successfully Starts Smart Live Spread Betting
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