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New Entrants to UK FX Market Target Retail

Retail foreign exchange trading firm Gain Capital has joined forces with US-based broker and clearing firm Rosenthal Collins Group (RCG) to launch an FX service in the UK. The combined entity, called RCG Gain Limited, will offer online FX and futures trading to self-directed retail investors initially in the UK.

Gain and RCG are the latest in a string of FX platforms trying to crack the UK retail market. In February, UK-based financial spread betting shop City Index acquired online foreign exchange broker FX Solutions to enhance its presence in the retail FX market and broaden its global reach. And last year, Forex Capital Markets (FXCM) moved to segregate accounts with the firm in accordance with UK financial regulations to get more business.

Maureen Downs, president of RCG, says the venture with Gain was inspired by increasing demand for US products from non-US customers. Plus global customers want to trade multiple products on one platform. She sees Europe as a growth area: "The trend we have been seeing is increasing demand for electronic trading on a self-directed basis from retail clients. This has been a part of the US landscape for a long time."

Downs adds there is a lot of competition in this space, and technology is key: "The key success factors are the quality of the technology and the ability for cross border trading with 24/7 support in multiple languages. Not many have committed to technology the way we have and Gain has."

Gain and RCG will cross-market their respective platforms to a broad range of clients in the UK, says Downs, from retail to large institutions. RCG has a range of trading platforms for futures trading on various global markets, while Gain operates the retail FX platform.

"Around 30-40% of our new customer accounts come from outside the US. They have an appetite for US products – equity indices, FX, interest rates. There is also increasing interest in grain, gold and energy," says Downs.

RCG has a small office in London already, says Downs, and they will be moving to larger premises and expanding during the course of this year. The RCG Gain venture will have share staff including an executive officer and a compliance officer, reporting to a joint board of directors.

The venture has received regulatory approval from the UK Financial Services Authority and the intention is to expand the trading service further into the European Union over time. A spokesperson for Gain says the UK is the "natural place for FX to expand" and will act as a "beachhead" for Gain’s entry into Europe.

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