Investment Trends Report on the state of the UK derivatives market

Investment Trends, an Australian wealth management and research organisation has recently released a report about the current state of the UK derivatives market looking at CFD, Spread Betting and Forex trading. The study was based on a sample of over 13,000 British investors with data being collected during the months of August and September. 

Low Volatility During 2013 Suppressed Trading Volume

The study estimated that around 82,000 Brits had used financial Spread betting during the past year before September 2013. These figures show a net decrease of 8% on July 2012, when it was estimated that 92,000 British residents had engaged in financial spread betting during the past year. This meant that 2013 was the first year since 2009 when the size of the UK Spread betting market decreased in size, this was due to a decrease in the number of new traders while the amount dormant accounts remained the same.  

When it came to CFD trading there was an even greater contraction with the number of active CFD traders decreasing from 25,000 to around the 21,000 mark. Taking into account both Spread betting and CFD’s that means around 100,000 British individuals use derivatives to trade the financial markets, making the UK the biggest market place in the whole of Europe. 

When it came to FX trading there was a much more modest contraction with a decrease of only 3% in terms of the number of active traders. Meaning that in September 2013 there was around 71,000 people actively trading the Foreign exchange markets. It should be noted that currently in the UK, the vast majority of traders use Spread betting and CFD’s to speculate on the FX markets, however increasingly traders are turning to leveraged FX products.

The contraction in the number of traders using FX, Financial Spread Bets and CFD’s was blamed on the lack of market volatility and the consistent strong performance of the FTSE100 and FTSE250 saw many traders turn to traditional share trading. Equity heavy CFD firms came out the worst effected with brokerages leaning towards FX fairing much better.

IG Markets dominates the UK Markets

The report also found that IG Markets still dominates the UK market being the top FX/CFD and Financial Spread betting firm. According to the report IG Markets lost some market share when it came to FX and Spread betting, with the firm increasing its dominance in the provision of CFDs.

Both FXCM and Alpari saw some growth of their FX market share, the report also briefly mentioned that FXCM was gaining market share quickly in a number of other countries analyzed by Investment Trends. Interestingly Plus500 became a major player in the UK CFD market taking 5% of the countries market share which is quite impressive considering that the broker wasn’t featured at all in last year’s Investment Trends report.

The full results of the survey can be found below: 

Top 5 FX Providers	Market Share Jul' 12	Market Share Sept' 13
IG	32	29
FXCM	8	9
Alpari	6	8
ETX Capital	6	6
CMC Markets	4	4