Interactive Brokers Suffers 30% Retail FX Fund Loss Within Four Months

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According to the US Securities regulator, October has been a bit of a dry spell for Interactive Brokers. The firm’s data shows that it’s lost over $5 million in forex deposits for the retail sector. The Connecticut-based company has been suffering several consecutive drops within its market share. It’s been considered the worst performer of the last few months, recording an overall decline of almost 30%. What’s worse is that this isn’t the first time the company has held the much-undesired title of the worst performer.

A Spiralling Number

The retail FX deposits of Interactive Brokers dropped down to $70 million, having hit a yearly peak of $103 million back in June of this year. The newest data shows that the change month-over-month from September was very minor. Not even the differences between each broker were pronounced.

The agency explains that the forex funding that’s held by registered brokerages that operate in the US totals to around $634 million in the month of October 2019. These numbers include Future Commission Merchants (FCMs) registered as Retail Foreign Exchange Dealers (RFEDs) as well as those classified as broker-dealers. The total is a measly 2% higher month-over-month when you compare it to September 2019’s $624.4 million.

The Market Share Leaders

GAIN Capital, one of the US’s largest brokerages, enjoyed a $3.8 million growth. Tallying it up, it’s a 2% month-over-month increase. OANDA’s retail deposits have enjoyed a hefty rise as well, clocking in at $10.3 million in October 2019. IG US had $694 000 added to its monthly deposits

In terms of market share, the distribution between the US heavyweights has only slightly changed in October when compared to the previous month. The largest broker remains GAIN Capital within the US. GAIN holds a market share of 39.0%, unchanged from the month before. GAIN Capital’s 2018 rating was a whopping 46%.

OANDA secured its position as a close second, only holding a percentage point less than GAIN, at 38%. Compared to OANDA’s share a month prior, it’s gone up a percentage point. TD Ameritrade managed to keep its 10% share, and Interactive Brokers retained its 11% share.

Race to the Bottom

What the future will hold for Interactive Brokers remains to be seen. The company had a good run on Q3 thanks to unusual rises in specific sectors. Keeping an 11% share, while nothing compared to GAIN and OANDA, is still a substantial amount of the US market. With IBKR Lite having rolled out a while back, the brokerage firm has joined up with the craze that started with Robinhood: Commission-free trading.

With it, it joins brokerages like Charles Schwab and TD Ameritrade, taking significant steps to provide free brokerage services in order to stay relevant after RobinHood blasted the financial industry with free trading. While the “free” trading has its oh-so-prevalent terms and conditions, it’s still an ingenious way to make money by attracting a larger group of consumers.

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