Monday’s new ‘impact report’ from Aite Group, an independent research and advisory firm focused on business, technology and regulatory issues and their impact on the financial services industry, says that after a slow start in the mid- to late-1990’s, the retail FX market has grown rapidly over the last couple of years.
The success of retail FX firms depends on their ability to develop and support reliable and comprehensive front-to-back office operations, says the report. Aite Group finds that in 2001, an estimated average daily trade volume in the retail market stood at US$10 billion, representing 0.8% of the overall FX market. By end of 2006, average daily trade volume reached over US$60 billion representing over 2% of the entire market, signalling plenty of room for future growth.
The report finds that now, a number of retail FX firms have brought to market products and offerings that will further enhance access and acceptance of the retail FX space.
“The potential growth of the retail FX market appears limitless at this point with potential key competition still missing from the competitive landscape,” says Sang Lee, managing partner, Aite Group and author of the report. “One thing is certain: FX has indeed arrived as a legitimate asset class in the retail market, as more and more retail clients embrace it as a way to diversify their portfolios and obtain higher returns than typically gained from more traditional asst classes,” adds Lee.