A new report from research company Aite Group estimates that the number of participants in the retail FX market surpassed 8.3 million people at the end of 2010.
Retail foreign exchange trading generates daily turnover of $315 billion, which is the equivalent to 7.9% of overall daily FX volume, the report says. This is already 32% larger than the average daily turnover for all equity markets.
“New regulations in major retail FX markets, including Japan and the US are expected to curtail the maximum leverage offered and bar unregistered brokers, moderating the rapid growth that the retail FX market has seen since 2005.
“These regulations are also triggering continued broker consolidation, higher standards, and lower trading costs. Conversely, the impact from these regulations is also attracting large new players to the space and setting the groundwork for continued, sustainable growth,” Aite says.
“A confluence of environmental factors – the adoption of personal computing and the Internet, as well as evolving regulations and technologies – led to the explosion of retail FX in a relatively short span of time,” says Javier Paz, senior analyst with Aite Group and author of the report. “The retail FX market has not yet reached mainstream distribution, but its daily turnover makes up a sizeable portion of the overall FX market, and its liquidity reverberates upstream through the institutional FX market.”