Interactive Brokers released an email to its clients that it will no longer be offering margin Forex to its customers. By September 1st all leverage Forex positions for Interactive Brokers clients must be closed or they must be an ECP or Eligible Contract Participant. An ECP is an entity that has over $10 Million in assets and is exempt from retail Forex regulations.
Interactive Brokers is seen as a firm in that has always been looking to offer new technology as well as access to global markets. IB had seen a 2% drop in client assets in the past month and this could be a contributing factor to the drop in offering Forex. Its most recent client assets were reported at just under $32 million. As a Forex Dealer Member, the firm is required to have $20 Million in net capital plus charges against open positions. IB may have decided that the cost of capital is just too great and the return on investment didn’t make sense. The cost of doing business in the US Retail Forex Market.
The exit of Interactive Brokers now brings the number of firms in the US offering Forex down to 4. FXCM and Gain are still the leaders and Oanda holds third position. TD Ameritrade will have the 4th position in the US. Regulators in the US have cited that these steps have been taken to protect clients best interest. One thing that it has not done is given Forex Traders in the US a choice. Most would agree that as you eliminate the competition the trader will probably get hurt in the end.
It seems pretty evident that the US has taken one more step to eliminating Retail Forex from the US marketplace.
Trading Forex and Derivatives carries a high level of risk, including the risk of losing substantially more than your initial investment. Also, you do not own or have any rights to the underlying assets. The effect of leverage is that both gains and losses are magnified. You should only trade if you can afford to carry these risks. Trading Derivatives may not be suitable for all investors, so please ensure that you fully understand the risks involved, and seek independent advice if necessary