Interbank FX (IBFX), one of the largest US-based retail FX brokers, has stopped offering the Connect social trading platform to its clients. The change was briefly announced by the broker in July, and as the news came about without too much ado it passed unnoticed to many.
IBFXConnect went into service in August 2011, making IBFX the first NFA-registered FX broker to provide a social trading service. The platform which was free for all clients which held demo and live accounts with the broker attracted thousands of customers and was relatively popular.
No motives have officially been stated by IBFX for the commercial decision to discontinue the service but one may suppose that several factors have underpinned the move. A possibity could be that the strict regulatory climate in the United States may render it unprofitable for the company once the impending regulations regarding social trading platforms are fully implemented. In Britain, the Financial Conduct Authority (FCA) has indicated that social trading platforms may be categorized as financial advisory services, which would require all lead traders to be registered and supervised as such.
Despite the perceived popularity among retail FX brokers as a method of reducing retention costs by increasing client engagement and lifetime value, IBFX is not the first firm to eschew such a service.
OANDA went to the great lengths of developing its own in house social trading platform fxUnity, only to discontinue it very shortly afterwards. A few months later, the firm purchased Currensee, which was at the time underperforming but offered OANDA the opportunity to gain a network of social traders in the Asia Pacific region.
Competition has taken its toll as social trading has now become an instrumental part of the retail FX landscape. OANDA now offers Trade Leaders Program, FXPro offers SuperTrader, and Saxo Bank’s Tradingfloor.com is gathering pace, and open social trading platforms like ZuluTrade are still prominent, which IBFX supports.
The decision by IBFX is in tune with similar steps taken by other FX firms across the globe. In June this year Alpari discontinued its TraderConnect social FX trading service. Additionally, relative newcomer, China-focused LigaForex, halted its entire operations in July this year. At the same time, the social Forex area witnesses the opposite dynamics too, with many brokers either launching their proprietary social FX platforms, making use of comprehensive solutions like Sirix, or offering their traders to copy signals on MT4. Tradency has taken this a stage further and developed an entire, end-to-end brokerage solution taking the firm from being a social trading provider to a comprehensive, all-encompassing technology firm.
Amid some of the most interesting pending launches is Connect by City Index, which has been active in the Australian market alongside IBFX. City Index Connect is still in its Beta version, however it remains to be confirmed as to whether it will go live.
After abandoning Connect, IBFX still offers social trading services to its clients: via ZuluTrade and Currensee. IBFX Australia also provides its clients with the opportunity to copy signals on Myfxbook’s AutoTrade platform. The latter, however, is not an option for US traders.