The United States of America has long been known as the ‘land of the free and the home of the brave', but when it comes to the US Forex market, that term takes on an entirely unique meaning. The NFA's increasingly stringent policies, aimed at protecting American investors, have continued to plague, and in some cases, to punish, US Forex brokers. The fees required to maintain a brokerage are prohibitive for most, and the trading conditions are limited as compared with those in other regions of the world where regulation is notably less stringent.
In August 2012, FX Club (aka Forex Club), formerly one of the top US brokers, abandoned its FRED license, the regulation required to accept retail clients. Since then, the company has been accepting institutional clients only, and it will likely continue to do so, at least for the foreseeable future. As part of this change, FX Club became yet another Forex broker to replace its CEO (following OANDA and GFT, among others), with Michael Klena, formerly of E*Trade, coming in to spearhead the company's shift.
Though FX Club abandoned its RFED license, the NFA continued to investigate (and badger) the broker, charging the company with administrative violations to the tune of $300,000, which the broker settled on the day that the claims were made.
Last week, only 2 months after FX Club closed its doors to American retail Forex traders, Advanced Markets made a similar strategic decision, opting to forego its RFED license and to pursue institutional traders exclusively. This decision is markedly less surprising, as Admiral Markets (aka AMIFX) has long maintained that it only supported a handful of retail traders, who, presumably, will be able to transfer their accounts quickly and easily with the broker's help if necessary.
What comes next in the US retail Forex market is unclear, but if the NFA's recent broker fines and increased regulations on retail brokers are any indication, it would not be surprising if additional US Forex brokers throw in the towel. Though I wouldn't expect industry giants such as Forex.com or FXCM to disappear anytime soon, smaller entities may find themselves fighting an uphill battle – one they may not be interested in fighting much longer.