Fidelity Investments may shake off its long-held conservative reputation in the coming months by opening a cryptocurrency exchange. Unnamed sources told Business Insider that the broker has circulated an employee memo, seeking to hire a programmer who can "engineer, create and deploy a Digital Asset exchange to both a public and private cloud." Abigail Johnson, owner of the privately held brokerage, expressed enthusiasm for cryptocurrencies in May 2017, noting that the broker "set up a small bitcoin and ethereum mining operation ... that miraculously now is actually making a lot of money."
U.S. mainstream investment houses expressed deep skepticism when CME bitcoin futures were rolled out in December 2017 but are being dragged along by the torrid pace of industry developments. Industry leader The Goldman Sachs Group, Inc. (GS) recently opened a bitcoin desk, and it now seems likely that brokers including Charles Schwab, Merrill Edge and Vanguard Group will be forced to reconsider their opposition to digital currencies.
The Commodity Futures Trading Commission (CFTC) has launched a market manipulation probe, filing subpoenas that will force Coinbase, Kraken, itBit and Bitstamp to provide trading data on CME Group's bitcoin futures contracts. The commission stepped in after CME failed to receive requested documentation from the cryptocurrency exchanges in the months following the December 2017 launch of the futures contracts.
A CME spokesman advised that the CFTC would look closely at trading data on the last Fridays of the month, when the average price of the four exchanges is used to compute futures pricing. Exchanges are expected to cooperate with the investigation. Interactive Brokers, TD Ameritrade, E*TRADE, Tradestation, Just2Trade and Lightspeed currently offer access to bitcoin futures, while other U.S. brokerages may add coverage in the coming months.
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IronFx has announced a partnership with EmurgoHKGroup, a Hong Kong coin and blockchain company, to roll out a cryptocurrency exchange. The Cyprus-based forex broker, also licensed in Australia and the United Kingdom, will launch IronX Exchange, a regulated venue expected to handle traditional currency pairs in addition to cryptocurrencies. The partnership will support new back office functions as well, including risk management, account management, payment and banking solutions.
The company has posted a website notice explaining benefits for those participating in a token sale that will launch the initiative: "Holders of IRX coins will benefit in a variety of ways. Based on holding levels, they will be entitled to additional services and incentives. Another such benefit is the issuance of discounts on spread paid in IRX tokens to IronX traders who use their crypto funds to open a trading account with the IronFX Group."
GAIN Capital Holdings, Inc. (GCAP), holding company for Forex.Com and City Index, reported that May retail volume rose to $243.3 billion, 9.4% higher than April's $222.4 billion. The results were also impressive year over year, rising 11% compared with May 2017's $219.5 billion. However, GAIN Capital also saw a slight reduction in account growth, dropping 1% compared with a year ago. The company offers introducing broker services to many U.S. and European forex operations that include Barclay's Trading Hub.
Dukascopy Bank insists that its primary venues won't be affected by August implementation of European Securities and Markets Authority (ESMA) rules that lower margin on major currency pairs to 30:1 from current levels that can exceed 200:1. The regulations will also prohibit binary options trading and negative account balances while sharply restricting CFD activity. The broker's main operations are regulated in Switzerland, which isn't a member state of the European Union, but its Latvian subsidiary Dukascopy Europe must comply with the new rules.