Global Forex Market Report in the First Half of 2020 I ( Global Forex Market)
Source: Fazzaco
PrefaceThe beginning of 2020 will definitely leave an unforgettable page in history. We were forced to stay at home and work from home, disinfect household surfaces, and get used to “social distancing”.Facing so many black swan events such as circuit breakers and negative crude oil price, we have to admit human beings are no match to our Mother Nature, no matter how powerful we expect we are.The same is true for you, who think you have gained the mastery of the market but may bite the dust overnight.But it doesn’t matter.Because there is no everlasting winter, and as you see, summer has already come.From the broker you’re dealing with every day to regulatory authorities that you are not familiar with, this report will show you what a real forex industry is with concrete facts and a huge amount of data, whether it is the same as you expected or not. What was the status quo of the global forex market in the first half of 2020?Undergoing volatility in the global market, what is the big picture of the regulation in different countries? What are the characteristics of China’s forex industry, brokers, introducing brokers, and retail traders? Based on our first-hand data, we also present you with the schemes used in “The Metamorphosis” of forex scammers and progress we have made in combating fake brokers to help you have a comprehensive and clear understanding of the dark side of the forex market.Chapter One Global Forex Market1.Trading volume and number of clients in the first half of 2020The global forex market started to witness high volatility in this February due to the outbreak of coronavirus, and underwent more dramatic fluctuations in the US stock indices, crude oil, gold, and dollar since March as the pandemic spread worldwide. It is known to all that the forex trading adopts a two-way quote model, which means traders can seek profits from ask or bid price. A volatile market means more opportunities for traders.1.1 Trading volumeFebruary: Increasing transactionsThe global financial market went through extreme fluctuations in February, 2020 when investors wagered on the new stimulus policies released by the central banks of different countries to diffuse risks brought about by COVID-19. The market volatility led to all-time-high trading volume on a year-on-year basis in the forex sector in many exchanges including MOEX, Cboe FX, CME Group and Euronext, despite a few exchanges declined in transaction volume on a month-on-month basis in February. To be more specific, FXSpotStream witnessed a daily trade value of $47.8 billion in February, an increase of 29% compared with $37 billion in January, and also an increase of 37% compared with $34.8 billion in February, 2019.British broker CMC Markets said its performance made great headway in the first two months of 2020. Interactive Brokers saw a new record high of Daily Average Revenue Trades at 1.35 million, an increase of 32% on a month-on-month basis compared with 1.019 million in this January, and also an increase of 63% on a year-on-year basis compared with 824,000 in February, 2019,.March: Skyrocketing trading volumeIncreasing liquidity in the financial market resulted in more frequent transactions in the forex exchanges. In March, many forex brokers witnessed skyrocketing trading volume. The following is the data disclosed by some companies or organizations.The trading volume on Interal, a forex tech company increased by 9% on a year-on-year basis.FastMatch, a forex transaction platform under Euronext, saw an ADV of $21.039 billion, a month-on-month increase of 16% ($18.14 billion in February) and a year-on-year increase of 12.1%.The trading volume in SGX soared 58% on a year-on-year basis in forex futures, with offshore USD/CNY futures almost doubled in trading volume.According to the data released by FXCM Group in March, 2020, cryptocurrency and some forex tools were affected by the market volatility. Besides, demand for gold surged due to lack of liquidity. FFAJ’s statistics showed that transactions based on individual margin accounts jumped from 403.1 trillion yen in February to 1015.6 trillion JPY ($9.4 trillion dollars). The trading volume of USD/JPY currency pair almost doubled to 721.4 trillion JPY, accounting for 70% in the total forex transactions.April: Trading volume started to fallAlthough the fluctuation continued, data showed that the forex market in April was not as active as March.TFX declined by 61.6% in total trading volume.FXSpotStream declined by 45% in daily trading volume on a month-on-month basis.MOEX totaled a trading volume of 29.1 trillion rubles, an decrease of 20% on a month-on-month basis.Interactive Brokers fell by 12% in April’s Daily Average Revenue Trades.The trading volume of exchanges, brokers, and platforms increased due to the outbreak of COVID-19. The first quarter of 2020 witnessed frequent trades in the global forex market.CME Group hit a new record high in its global trading volume. The global Average Daily Volume reached 7.2 million contracts, an increase of 57% on a year-on-year basis.EMEA’s ADV reached 5.4 million, an increase of 54% on a year-on-year basis.Latin America’s ADV amounted to 182,000 contracts, growing by 21% compared with Q1 of 2019.May: Many organizations and brokers waited for reboundData indicated that many organizations and brokers were still struggling in May after their trading volume declined in April.Statistics from Euronext N.V. showed that its trading volume mounted to $409.0 billion in May, a decline of 8% compared with $446.0 billion in April and a larger gap compared with $814.0 billion in March. The same was true of Exness, who totaled a trading volume of as high as $785.0 billion in March, but plunged to $480.0 billion in April and then to $387.0 billion in May. June: Some brokers saw reboundAn increasing number of traders turned to FX trading due to more dramatic market fluctuations. Published data showed that some brokers saw growing trading volume in June.CBOE FX Markets registered a trading volume of $761.6 trillion, a MoM increase of 15.7% .FXSpotStream reported an ADV of $43.2 billion, a MoM increase of 20%.Interactive Brokers data showed that it recorded a MoM increase of nearly 13% in trading volume, the best performance since March 2020. 1.2 Growing new accountsAs the market became more volatile and involved more transactions, brokers saw an increasing number of new accounts.On the one hand, crashes in the stock market and other financial sectors sparked massive sell-off by investors and traders to avoid a worse scenario, and the forex market, characterized by its two-way quote model, became a field with the greatest potential of producing huge profits under all kinds of uncertainties. Hence, many investors shifted their focus from other financial products to the forex market.On the other hand, attracted by wider and frequent volatility, some passive traders returned to the market in order to gain generous profits. 1.3 Trend—Volatility continuedWith trading volume and new accounts hitting an all-time high, forex brokers became more active in the market after going through the market turbulence. As time went by, investors started to doubt how long the market volatility would last.Some senior executives argued that even the lockdown was put to an end, the market turbulence would continue. Andrew Edwards, CEO at Saxo Capital Markets UK, stressed that longer lockdown would cause more damages to the global economy. Uncertainties would last unless the lockdown was lifted in order for market recovery.
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