Lack of volatility makes FX less attractive
Australian foreign exchange providers saw a decline in the number of investors trading in the market in 2014 on the back of low volatility, a new report reveals.
The Investment Trends 2014 Australia FX Report found that 2000 fewer investors placed at least one FX trade through a domestic provider in 2014 compared with 2013.
While the report indicated the Australian experience was in line with international trends, Investment Trends analyst, Irene Guiamatsia said, "this trend could reverse in 2015".
The survey reported that 53 per cent of FX traders said they would trade more frequently once volatility picked up, while 17 per cent indicated they would reduce their trading activity if the market became more unpredictable.
Although trading was relatively low in 2014, the survey found that trader satisfaction with their main provider increased.
"FX providers have continued to drive improvements in client satisfaction through product innovation" said Guiamatsia.
"Over the past year, the majority of FX traders noticed useful innovations from their main broker, with the most notable being FXCM's new pricing structure and Axitrader's upgrades to the Metatrader 4 platform".
As a result, the rate of switching from one provider to another dropped from 27 per cent in December 2013 to 19 per cent in November 2014, the largest decline among all countries surveyed by Investment Trends.
"Trader loyalty is, however, likely to have already been unsettled by the upheaval of floating the CHF/EUR pair. The picture in 2015 will depend on each provider's readiness to adapt to the new environment", said Guiamatsia.
AUTHOR
Nicholas O'Donoghue
Recommended for you
ASIC’s enforcement action is having an active start to the new financial year, banning a former Queensland financial adviser for 10 years in relation to fees for no service conduct.
ASIC has confirmed the industry funding levy for the 2024–25 financial year, and how much licensees can expect to pay.
Australian licensees are expected to make greater use of custom model portfolios for their clients, according to State Street Investment Management, following in the footsteps of US peers.
Adviser Ratings has argued that it’s time for more advisers to utilise digital engagement tools available to them as a disconnect grows between consumers seeking advice from finfluencers and from professionals.
