2016 Australia CFD Report: market shrank despite increased market volatility

From
Irene Guiamatsia

Irene Guiamatsia

Investment Trends has released its 2016 Australia CFD Report, an in-depth study of Australian CFD traders’ attitudes and investing habits, based on a large-scale survey of more than 15,000 investors and traders conducted in May 2016.

Key highlights include:

  • The Australian CFD market shrank despite increased market volatility
  • Traders are more willing than ever to promote the provider they use
  • Switching intentions are on the rise, with a third of potential switchers yet to pick a broker

The Australian CFD market shrank despite increased market volatility

Volatility typically energises the CFD market. Yet despite repeated spikes in global market volatility through the last year, retail participation in CFD trading declined by 14%. 37,000 Australian investors placed at least one CFD trade in the 12 month period ending May 2016, down from 43,000 in June 2015.

“The decline in CFD trader numbers is somewhat surprising in the face of reignited market volatility and healthy client inflows,” said Dr Irene Guiamatsia, Senior Analyst at Investment Trends. “The number of those entering the market for the first time was on par with a year ago, but many previously active clients stopped trading as they struggled to identify good investment opportunities.”

For providers, this outcome highlights the importance of developing and promoting quality education programmes that foster client activity and drive market growth.

Traders are more willing than ever to promote the provider they use

Active CFD trading clients continue to be highly satisfied with the service they receive, and as a result have become more likely than ever to recommend the provider they use to friends and relatives.

Our measure of client advocacy, the Net Promoter Score, jumped to the highest level recorded since the inception of this study.

“CFD traders are increasingly willing to recommend their main provider,” said Guiamatsia. “This presents excellent opportunities to bolster client acquisition strategies. We find word of mouth to be a consistently important trigger to uptake for those who start trading CFDs”

Smaller provider FP Markets scores highest on this client advocacy metric. AxiTrader, market leader IG, Saxo Capital Markets and CMC Markets round up the top five.

Switching intentions are on the rise, with a third of potential switchers yet to pick a broker

Just under half of active CFD traders are open to switching providers over the next 12 months (44%, up from 35% a year ago), with a third of that group undecided as to which provider they will choose.

“There is a clear need for providers to uphold the highest possible standard of service to keep their clients happy, while client acquisition opportunities abound for those who are better able to showcase their value proposition to traders open to making a move,” said Guiamatsia.

Building trust is becoming increasingly important among the many elements providers need to deliver to attract potential switchers. Traders point to segregation of client money and transparency of fees and charges as good proxies for trustworthiness.

You must be logged in to post or view comments.