The analysts at Citi and I are not the only ones thinking about the future of the retail foreign exchange business. Adam over at the Forex Blog had a post out over the weekend on the same subject. The potential expansion of a stock broker like Charles Schwab (following on the earlier move of TD Ameritrade into the space) could add another well capitized (and highly respected)Â player to the space, increasing competition for trader dollars. I will contest Adam’s suggestion that spreads in forex are “healthy” (see The Cost of Trading), but not his conclusion that more competition is likely to make trading more commoditized and transparent.
The interesting thing to watch is how the SEC vs. CTFC regulatory difference might come into play. Schwab and TD Ameritrade are securities brokers who fall under FINRA andÂ the SEC, as opposed to the straight out retail forex brokers who fall under the oversight of the NFA and CFTC.