The reasons behind FXCM’s US exit tarnish the entire industry – Advanced Markets’ COO

FinanceFeeds’ team keeps exploring the outcome of the exit from the US retail FX market of FXCM, following findings by US regulators that the company traded against its customers for several years while presenting its model as a non dealing desk.

Advanced Markets’ Chief Operating Officer Michael Cairns has kindly agreed to share his view on the recent developments in the US financial markets, as well as FXCM’s departure. Mr Cairns’ career in global financial markets spans close to 30 years. Prior to joining Advanced Markets as its COO, he was the CEO of FX Solutions. All of these career achievements make Mr Cairns the ideal industry figure to offer some incisive insight into the current situation in the US FX market. We also could not help asking him about his opinion on the potential regulatory changes in the US.

Does this sound interesting to you? Read on.

FXCM is leaving the US

“With regard to the departure, from the US market, of its largest remaining retail FX firm, I would have to say that the reasons/charges behind the forced exit unfortunately tarnish the entire industry with clients likely to question whether their broker is actually doing what they “advertise” that they are doing” – Michael Cairns, COO, Advanced Markets.

“Eventually those firms with a purely transparent business offering should be able to rise above the doubt and mistrust and take advantage of the opportunities that this market potentially offers”, he added.

The new US administration

“People from our industry, here in the US, are watching the new administration’s moves with a degree of cautious optimism. Recent comments have been signaling that a 75% reduction in regulations is on the horizon”. Mr Cairns explained.

“Of course, it’s too early to speak on any actual changes that may be forthcoming, but, just the mention of a loosening of regulations is creating a sense of optimism within a US FX industry that has basically been in sleep mode since the Dodd Frank Act was put in place after the 2008 financial crisis” – Michael Cairns, COO, Advanced Markets.

Setting up brokerages in the US

Mr Cairns was keen to elaborate on what it takes to set up a brokerage in the US, and that the factors for a spurt of interest in this respect spread beyond relaxed regulation.

“If the anticipated relaxing of regulations does transpire, then we could have the potential of more business coming back to the US and a more business-friendly environment. A repeal of Dodd Frank, or even a reduction in its burdensome restrictions, could lead to firms seriously considering the possibility of setting up brokerages in the US again however, before we get too euphoric, we need to be mindful of the regulatory capital that is required to register as a US retail FX broker. Firms would still need to deposit in excess of $20 million just to get a license”, he said.

“Regardless, these positive signs are a breath of fresh air for US FX industry that has been in stagnation for the past nine years. We ultimately need a free market where firms can compete on a level playing field without fear of overly-restrictive regulation”, he concluded.