FX Market Sees 4% Decline, Recovery Discussed at FMLS

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In 2023,
the forex (FX) industry faced challenges and declining trade volumes, which
shrunk by an average of 4%. Its future and what 2024 will bring were discussed
during the Finance Magnates London Summit 2023 (FMLS:23) in a panel featuring
Naomi Ewart-Simcock, the Senior Account Manager at ActivTrades UK, and Opal
Yang, the Forex Regulation Consultant at New Direction Business Consultant.

“Spot transactions were down by 3.3%, forwards decreased by 7.10%, and so forth. Overall, we see a decline of approximately 4%,” ActivTrades UK’s representative commented.

Ewart-Simcock
opened the discussion during the panel titled “Trading Summary 2023:
Trading Behaviour Shifts, Risks, and Outlooks” by highlighting the
challenges faced by the FX industry in 2023, noting significant workforce
reductions among leading brokers. She stressed the need to understand this
downturn’s underlying causes and explore potential recovery strategies.

Naomi Ewart-Simcock

“2023
wasn’t a good year for the FX industry in general. We saw the leading brokers
has lost up to something like 10% of the workforce,” said Ewart-Simcock.
She attributed the decline to high inflation and interest rates. However, over
50% of market analysts predict interest rates will fall next year. “Once
it’s reached the bottom, the only way is going up,” she added.

Yang
questioned the impact of these economic factors on trading companies, leading
to a discussion about the need for brokers to diversify their offerings.
Ewart-Simcock suggested that promoting non-FX CFDs, like futures, metals,
commodities, and indices, could be a viable strategy.

Declines in
volumes are confirmed, among others, by data published monthly by Finance
Magnates
and the BCG Expand Research report for the first half of 2023.
Spot FX volumes declined 7% during the period.

Amidst
these challenges, the panelists highlighted the explosive growth of funded
trading through “prop firms” as a bright spot.

Prop Trading Offers
Opportunities

shared
insights from her research, noting the rapid growth of proprietary trading and
its appeal to traders. She highlighted the significant number of new accounts
and profits generated by leading prop trading platforms, comparing them to
traditional Forex retail brokers like IG.

Opal Yang

“I
wouldn’t say I’m an expert in it, but we do see the increased numbers,”
said Yang. She cited statistics showing funded trading platform FTMO gained
960,000 new accounts and over $100 million in profit in 2022. Representatives
from FTMO addressed the potential of the prop trading industry in a separate
panel during FMLS:23
. They suggested that it will continue to develop, but it
may face significant consolidation.

“You
can trade without having your own funds. Quite attractive for the
traders,” explained Yang. She attributed the model’s popularity surge to
social media and psychology.

However,
recent regulatory scrutiny of top firms like MyForexFunds raises questions. The
lawsuit against a popular company revealed that the industry is amassing a lot
of money, is under-regulated, and is increasingly full of fraudsters and
dishonest actors.

While
regulations may limit payouts from the current high rates, Yang believes funded
trading has a few years of strong growth ahead. As an introducing broker, she
advised: “We should definitely think about how we can also make profits
from this phenomenon.”

In 2023,
the forex (FX) industry faced challenges and declining trade volumes, which
shrunk by an average of 4%. Its future and what 2024 will bring were discussed
during the Finance Magnates London Summit 2023 (FMLS:23) in a panel featuring
Naomi Ewart-Simcock, the Senior Account Manager at ActivTrades UK, and Opal
Yang, the Forex Regulation Consultant at New Direction Business Consultant.

“Spot transactions were down by 3.3%, forwards decreased by 7.10%, and so forth. Overall, we see a decline of approximately 4%,” ActivTrades UK’s representative commented.

Ewart-Simcock
opened the discussion during the panel titled “Trading Summary 2023:
Trading Behaviour Shifts, Risks, and Outlooks” by highlighting the
challenges faced by the FX industry in 2023, noting significant workforce
reductions among leading brokers. She stressed the need to understand this
downturn’s underlying causes and explore potential recovery strategies.

Naomi Ewart-Simcock

“2023
wasn’t a good year for the FX industry in general. We saw the leading brokers
has lost up to something like 10% of the workforce,” said Ewart-Simcock.
She attributed the decline to high inflation and interest rates. However, over
50% of market analysts predict interest rates will fall next year. “Once
it’s reached the bottom, the only way is going up,” she added.

Yang
questioned the impact of these economic factors on trading companies, leading
to a discussion about the need for brokers to diversify their offerings.
Ewart-Simcock suggested that promoting non-FX CFDs, like futures, metals,
commodities, and indices, could be a viable strategy.

Declines in
volumes are confirmed, among others, by data published monthly by Finance
Magnates
and the BCG Expand Research report for the first half of 2023.
Spot FX volumes declined 7% during the period.

Amidst
these challenges, the panelists highlighted the explosive growth of funded
trading through “prop firms” as a bright spot.

Prop Trading Offers
Opportunities

shared
insights from her research, noting the rapid growth of proprietary trading and
its appeal to traders. She highlighted the significant number of new accounts
and profits generated by leading prop trading platforms, comparing them to
traditional Forex retail brokers like IG.

Opal Yang

“I
wouldn’t say I’m an expert in it, but we do see the increased numbers,”
said Yang. She cited statistics showing funded trading platform FTMO gained
960,000 new accounts and over $100 million in profit in 2022. Representatives
from FTMO addressed the potential of the prop trading industry in a separate
panel during FMLS:23
. They suggested that it will continue to develop, but it
may face significant consolidation.

“You
can trade without having your own funds. Quite attractive for the
traders,” explained Yang. She attributed the model’s popularity surge to
social media and psychology.

However,
recent regulatory scrutiny of top firms like MyForexFunds raises questions. The
lawsuit against a popular company revealed that the industry is amassing a lot
of money, is under-regulated, and is increasingly full of fraudsters and
dishonest actors.

While
regulations may limit payouts from the current high rates, Yang believes funded
trading has a few years of strong growth ahead. As an introducing broker, she
advised: “We should definitely think about how we can also make profits
from this phenomenon.”



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