Australia, Slow Down in CFD Activity

August 17, 2011Andy No Comments »

The number of investors dealing in CFDs in Australia has slowed down given the persisting high levels of market volatility and increased awareness of the risks involved.

According to a report by research specialist Investment Trends, while less investors stopped trading contracts for difference, the number thinking about maiden CFD trades has fallen.

‘Growth in the number of Australian CFD traders has slowed, both as a result of ongoing high levels of volatility, plus heightened regulatory and media discussion of the risks involved in margin trading,’ Investment Trends Principal Mark Johnston was quoted saying.

The research also noted that in the 12 months to May 2011, more people shifted to trading currencies away from individual equities. Foreign exchange deals accounted for 27% of all CFD activity in the 12 months preceding May 2011. CFDs involving Australian blue chip stocks, which made up the largest proportion of CFD trades a year before constituted just 21% of all CFD trades.

The report also found that the number of active Australian CFD traders experienced a modest rise from 39,000 to 41,000 in the 12 months to May 2011. The research also found out that client satisfaction levels were unchanged compared to last year.

Johnston noted that it will be quite interesting to see how the market will evolve going forward.

‘At around 7 per cent of the online share trader population, adoption of CFDs in Australia is a little under half the level of adoption of CFDs and/or financial spread betting in the UK,’ he said.

‘We’ve also seen a lot of development in the Australian CFD industry this year, with the regulators tightening up on disclosure of risks to ensure people enter with their eyes open, and the introduction of variable leverage meaning people can potentially more actively manage the risks they take.’

More investors are choosing to utilise guaranteed stop loss orders which is all about limiting downside exposure. The research report was based on a survey of 15,317 investors conducted in May 2011.


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