One of the leading research companies delving into the depths of the behavior of retail investors and data from their brokers, Investment Trends, has released the firm’s annual report for Australia. The document is the result from a survey of more than 15,000 traders and investors in CFDs.
Looking at the findings in the report, a pair of CFD providers stands out - IG Group and CMC Markets have once more asserted their dominance in Australia. The duo is now maintaining a vast lead over competitors with close to 56 per cent market share.
While the turbulent times on the foreign Exchange market have had some impact for a small number of traders in the industry, the vast majority remained unscathed by the Swiss franc turmoil. On the contrary, foreign exchange Volatility in the aftermath could have had a positive impact on the broad interest of investors towards FX.
When it comes to CFDs trading, the effects of the Swiss National Bank-induced panic in January have been rather subdued - the number of active CFD traders has increased by 1,000 to 43,000.
The continuing growth in popularity of CFDs trading can be attributed to increased volatility in a number of equity markets, as well as commodities.
As to the number of prospective clients, which is defined by people who intend to place their first CFD trade over the coming year, the figures have been quite buoyant. The figure increased by 25 per cent to 15,000 in 2015 when compared to last year. The figures are similar to the number of online share traders, which is typically the biggest pool of new clients for CFD trading.
Key figures for brokers to know
With the growing number of traders, brokers might like to understand the most important factors which traders have in mind when opening a trading account. CFDs Investment Trends Australia 2015 finds that almost 50 percent of existing CFDs traders who are looking for a new broker haven’t made their mind up yet.
According to the document, one key factor which will influence their decision the most is the offering of single share CFDs. This factor surpasses the second most important piece of a broker’s offering - pricing.
The Senior Analyst at Investment Trends, Irene Guiamatsia, commented on the results: “The 2% growth for the second consecutive year means the Australian CFD industry has nearly recovered from the contraction seen back in 2012/2013, when the global leveraged trading industry was marred by volatility drought,” she said.
“The healthy state of the industry in the midst of challenges posed by the January 2015 Swiss Franc crisis is a laudable outcome. Our research shows there was an underlying shift in product usage with fewer trading CFDs over FX at the benefit of trading CFDs over shares and indices,” she added.
The report highlights that a little less than half of existing CFD traders (45 per cent) who are looking for a new broker haven’t made up their mind. Amongst those who are willing to open a trading account within the next 12 months, 61 per cent say that single share CFDs are a must for them to open an account.
This figure contrasts to other regional surveys - only 14 per cent of Singaporean traders and 3 per cent of German CFDs aficionados are demanding single share CFDs on the same platform.
Commenting on the matter, Mrs Guiamatsia said, “The Australian case is of particular interest in light of the global trend that has seen a transformation of leveraged products providers into multi-asset brokerages.”
IG and CMC Markets continue dominating the market
The two top providers of CFD trading services in Australia continue extending their lead. They now hold a combined 56 per cent share of the market, which is up from 50 per cent last year.
“Traders most often felt they could find these elements of security in the top two players, owing to their solid reputation and global clout,” said Guiamatsia.
“Going forward, providers’ credentials and product disclosure statements are likely be scrutinised more intently,” she added.
The second most-used CFDs provider, CMC Markets, is already delivering single share contracts in Australia although traders have to use a separate platform to access those. The market leader IG still isn’t making its full suite available in the UK and in some other parts of the world.
