Retail FX: Growth Strategies in a Maturing Market

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14 June 2012


After the phenomenal growth phase of 2005–2008, during which retail FX volumes catapulted, the industry entered a phase of maturity, during which growth rates slowed down and regulatory constraints increased. Regulators worldwide started focusing on enhancing consumer protection to reduce the risk of uninformed investors falling prey to the appeal and advertisements of higher returns. This has resulted in leverage cuts as regulators attempt to minimise investor risks. Education venues and social networks, on the other hand, are enabling new investors, with better tools and knowledge to understand market dynamics.

In a new report, Retail FX: Growth Strategies in a Maturing Market, Celent focuses on the current state of the retail foreign exchange market and how it is evolving in 2012. The report analyzes the key trends in the market as well as the opportunities emerging for retail FX geographically, and how firms can gear up for these opportunities. Given the financial pressures, brokers have to develop a cost-effective marketing and communication strategy to acquire and retain customers.

Key Emerging Markets


Importance of FX Focus

Additional Notes


Very high

Hub for growth in Asia-Pacific.

Regulatory requirements are more firm-friendly.

Building a team is easier in Australia.

Global FX brokers have already entered the market.



Large market and good growth rate.

With global events in the next two to three years, FX will be boosted.

Regulations are stringent.



Regulatory restrictions are high and will take a long time to be relaxed.



Deregulation of the currency will be complete in the next three to four years.

Opportunity to access a huge market base.

Regulatory clearances are not easy, but players can enter the market offering educational and other related services.



Malaysian regulator has clarified that retail FX trading is not allowed since it is not compliant with Shariah law.

Source: Celent analysis

Given the rising competition, Celent expects the more dynamic brokers to invest more to deliver better technology and product enhancements to deliver better services to customers. In 2012, Celent anticipates that the end-to-end solution offerings will be a core focus area for FX brokers. Celent expects alliances and collaborations with post-trade technology providers and pretrade providers as brokers focus on delivering more functionalities to their customers, as well as expansion of FX-only platforms to evolve into multiasset platforms. To cross-sell more products and generate higher revenues per customer, platforms will focus on integration with other asset classes.

Celent expects more “prime broking” to cater to highly active retail customers who can leverage the provider’s balance sheet, given the regulatory constraint on leverage. As mobility trading gains traction in retail FX, Celent expects mobility offerings to become mandatory for FX platforms to retain customers.