April saw broker volumes fall off significantly from the near-record numbers recorded in February and March. Profits, though down as well, were respectable as a result primarily of mid-month moves in oil markets that saw prices fall briefly into negative territory. Profits were also buoyed by movements in gold and US indices. Oil prices will likely be in focus again in May as we approach the expiration of this month’s futures contract.
The recent rise in market volatility has left all brokers susceptible to being taken advantage of by predatory traders but this is particularly true for startups and smaller brokers. While the opportunities for traders to attempt to exploit brokers have always existed, current market conditions have exacerbated the risk with strategies ranging from weekend gap loading to depth of book and spread arbitrage.
Volume totals in March matched the strong numbers from February, though daily figures trailed off late in the month. Daily profit figures also softened in the second half of the month, but monthly totals exceeded February as volatility in a broad range of markets brought strong early month results. After the turbulent market movements in February and March, volatility will likely continue while markets try to discover their true bottom.
Recently, there have been some new offerings coming on to the market offering retail brokers direct access to liquidity. The implication is that by accessing the primary market “directly”, the broker will get better trading terms.
This is actually not the case, and it shows a fundamental lack of understanding on the part of the technology companies who are providing the offering, and even more surprisingly, the “Prime of Primes” who are “clearing"it.
February was an excellent month for brokers as Covid-19 coronavirus fears brought volatility to a wide range of markets. Volumes were up substantially from January, with some brokers reaching record monthly totals.
Profits were also robust, driven primarily by late month declines in stock indices and gold. With the uncertainty surrounding coronavirus continuing, the volatility may persist well into March, if not longer.
2020 is off to a strong start as volumes and profits rebounded from a pedestrian month of December.
Early month profits were driven primarily by Gold, and the month finished strong on late month movements in the Euro. Indices also produced profits throughout the month as reactions to the spread of the coronavirus added volatility to equity markets.