Deutsche Bank is exiting the Retail FX space by selling its hugely successful FX platform dbFX to Gain Capital, in order to focus on its core institutional FX business. The business was started in 2006, using technology provided by FXCM. However, this was no ordinary retail FX business, this was Deutsche Bank retail client FX flow. As such, the average account size of dbFX clients at $100k was some 40 times the average account size for in the retail FX business. Yet for the mighty Deutsche Bank, this is seen as a distraction to their core institutional FX business (full story here).
According to Bank of International Settlements Data (BIS), retail FX has been growing strongly, and has accounted for over 10% of global FX volumes (see here). Yet, not everyone is making money from retail FX. Goldman Sachs who bought a 10pct stake in CMC only three years ago, last year wrote down their $140mln investment to nearly zero (story here)
Personal View: Too early to tell whether Deutsche Bank is calling the top for Retail FX, and whether we will see other banks begin to exit this space, or (as I suspect) this is more a sign of the focus of the top global FX banks on their core institutional client business, and that even a profitable platform such as dbFX is seen as a distraction for Deutsche Bank to it’s core client franchise!
Also, the consolidation in retail trading platforms continues with the above deal, and also in the US, with trading platform TradeStation for Active Traders being sold for $411mln to the large Japanese Brokerage MONEX: story here
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[…] All top 3 banks saw market share fall, with Deutsche seeing largest drop of any bank in the top 20 (confirming my comments last week regarding Deutsche’s decision to sell dbFX, to focus on their core franchise here) […]