ODL looks from west to east
The CFTC’s decision to hike the net-adjusted capital requirements for its forex dealer members is causing a significant reshaping of the US retail market.
On January 17, FDMs will be required to post $15 million, increasing to $20 million in May. The actual amount firms have to set aside is also affected by the amount of leverage they provide and activity they see. Many, and this includes some FDMs such as CMC who have the financial muscle to comply, have decided that it is becoming unviable to operate in the US.
ODL Securities is the latest company to reach this conclusion. The company has decided to sell what it says is its profitable US FX business to FXCM. Sources at the company suggest that ODL would have to set aside as much as $50 million to comply with the new requirements and that a strategic decision has been made to use its financial capital more efficiently to fuel growth in other parts of the world.
The company is believed to be poised to announce new joint ventures in Turkey and Australia, as well as expanding its existing operations in Japan and Canada. Meanwhile it has yet to be seen how other firms will react to the latest CFTC hike. According to the latest financial data for futures commission merchants (see http://www.cftc.gov/marketreports/financialdataforfcms/index.htm),