Investment Trends recently released its 2015 Australia FX Report an annual in-depth study of Australian retail foreign exchange (FX) traders, their attitudes, trading behaviour and future intentions. The report is based on a survey of 13,910 online investors including 3,967 active FX traders, conducted throughout October and November 2015.
Key highlights include:
- The 49,000 trader Australian FX market is poised for growth
- IG, CMC and FXCM continue to lead in a market that is becoming increasingly crowded
- Switching activity picked up and is likely to accelerate – an opportunity and a threat for all FX providers
The 49,000 trader Australian FX market is poised for growth
FX traders like volatility, and the instability in global financial markets over 2015 provided a welcome boost to leveraged trading globally. The number of active Australian FX traders was steady at 49,000 in 2015, after a few years of contraction (see table).
*Number of unique retail traders who placed at least one FX trade (i.e. a leveraged position on a currency pair) in the previous 12 months.
“For the first time in four years, the number of people who stopped trading FX was matched by those who started or resumed trading,” said Dr Irene Guiamatsia, Senior Analyst at Investment Trends. “The industry has the opportunity to grow significantly during 2016, underpinned by the strong growth of the pool of next wave traders over the last 12 months”
The report found that the number of people intending to place their first FX trade in the next 12 months climbed by 60% compared to the previous year. And fairly consistent historical conversion rates mean an estimated 17,000 investors are expected to begin trading FX in 2016.
IG, CMC and FXCM continue to lead in a market that is becoming increasingly crowded
Despite an increasing number of smaller players, IG, CMC and FXCM continue to lead the industry by primary market share. IG remains the largest FX provider in Australia (14% primary share), followed by CMC Markets (11%) and FXCM (10%).
CMC Markets and Pepperstone were the largest market share movers in 2015, increasing their primary market shares by 2 percentage points and 3 percentage points respectively. While both firms managed to attract many people new to FX trading, Pepperstone also successfully attracted a disproportionately larger share of those who switched from one FX provider to another.
Pepperstone’s growth comes hand in hand with climbing the ranks to take the lead in overall client satisfaction. Each year, Investment Trends recognises brokers who receive the highest ratings from their FX trading clients in select categories. In 2015, the awards went to the following brokers:
|Platform features||CMC Markets|
|Value for money||OANDA|
Switching activity picked up and is likely to accelerate – an opportunity and a threat for all FX providers
With elevated volatility levels, overall trading activity is picking up and FX traders are more likely to shop around for the best offer. In the 12 months to November 2015, an estimated 10,000 FX traders left a provider and continued trading elsewhere. This represents 21% of the Australian FX market (up from 19% in 2014), and places Australia third by switching levels, after France (28%) and the UK (26%).
“Increased trading activity and a more seasoned and demanding client base are fuelling the switching activity,” said Guiamatsia. “The clear opportunity for all players is that nearly one in two of those looking to move to a new provider this year do not know who to go with next.”
“These trends also mean providers need to deliver first class service and have strong retention strategies in place to avoid losing clients,” she added.