Love is changeable. A few years ago, traditional brokerages fell in love with the forex/CFD market. Race brokers have introduced this service in their offer. This feeling was mutual, at least in the first years and in the case of the companies which first decided to undertake such a step. Later, as in relationships, there were crises that were mostly regulatory in nature. Some relationships have not stood the test of time. Thus, some traditional brokerages quickly withdrew from forex, focusing on the stock market.
Is it a fleeting romance
Today we have a completely different situation. There is a new sentiment but this time forex and CFD brokers in the stock market. More and more companies decide to expand their offer, believing that they will also save part of the stock market cake for themselves.
At XTB, chaired by Omar Arnaout, you can trade stocks and ETFs commission-free (up to a monthly turnover of EUR 100,000). The offer is an effective magnet for new investors.
The only question is whether this is just a fleeting romance again.
Recently in “Parkiet” we informed that another company, which so far operates in the forex market, is expanding its offer. Conotoxia Ltd. has made more than 5,000 new instruments available to users of the Cinkciarz.pl portal, including those related to the stock market, i.e. stocks and ETFs (in the direct market access formula ).
– We are launching a comprehensive investment product. We give investors over 5,000 new instruments. It will not only be currencies, but also CFDs on various assets, cryptocurrencies, as well as instruments reflecting stocks or ETFs, without leverage, at prices that will be present on stock exchanges and orders that will enter the sheet. We watched what the competition was doing and how investors behaved over the past two years. Today, they need to have everything in one place and that’s why we are launching a complete solution based on a single account. We give our customers everything that is possible in the market, and in fact, this is just the beginning. Our offer will be constantly improved – explained Grzegorz Jaworski, President of Conotoxia Ltd. in “Parkiet”.
At TMS Brokers, whose president is Marcin niewiadomski, you can trade more than 3,000 stock market instruments. In the case of stocks from foreign markets, brokers do not charge a commission for trading. In the case of the WSE, it is 0.19%.
The company is currently suing other forex/CFD brokers. Stocks in their offering include XTB, TMS Brokers, and eToro. – The stock offering in XTB is very popular. We decided to introduce it because we noticed a clear trend – investors want to have the widest possible selection of various assets and be able to invest in them within one trading platform. That’s why we want to allow our clients to invest commission-free in different asset classes, including stocks – says Filip Kaczmarzyk, Member of the Board of Directors of XTB.
Marcin Niewiadomski, president of TMS Brokers and responsible for Oanda for Europe, speaks in the same direction. – In recent years, we have noticed a growing interest in investing in many types of asset classes, which is reflected in the growing popularity of brokers providing access to many markets, thousands of products via the Internet or an application mobile. The current offer of TMS Brokers will fully satisfy the needs of different customer groups. We see the growing popularity of real stocks, which is why more than a year ago we added several thousand stocks from the US, Polish and European markets – says Niewiadomski.
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Statistics confirm that the choice was the right one
Brokers who have introduced stock exchange products into their offer confirm that today this service is not just art for art’s sake. It’s a great magnet for new investors who don’t necessarily want to dive into deep waters and invest in leveraged instruments.
Conotoxia Ltd., whose president is Grzegorz Jaworski, has decided to expand its offer. It added more than 5,000 new instruments, including those related to stock markets (in the DMA formula).
– eToro offered its users in Europe the possibility to buy “real shares”, which means that from June 2018 you can own the underlying asset instead of buying CFDs, and the number of users owning shares has risen sharply since then. The vast majority of eToro users invest in “real” stocks and cryptocurrencies. 85 percent eToro’s assets under management are real assets, not CFDs, says Shany Hahn Shalom, eToro’s regional manager for CEE.
The power of stock-related services is also evident with other brokers. – Currently, more than 50 percent of new customers, the first transaction with XTB is carried out on the equity markets. We also see investors from foreign markets interested in WSE companies, but so far these are rather isolated cases – says Filip Kaczmarzyk. As he adds, having access to various assets within one platform makes investors more willing to use all the opportunities offered by the broker.
EToro, whose CEE CEO is Shany Hahn Shalom, launched its equity offering in 2018 and today this area is the top choice for most investors using the platform.
– In the long term, about 60%. accounts, clients transact both stocks and CFDs. At the same time, we can see that they are increasingly interested in foreign markets and are more and more willing to add foreign companies listed on world stock exchanges to their portfolio. This is one of the reasons why, at the beginning of this year, as the first brokerage in Poland, we allowed our clients to submit the W8BEN form and benefit from a reduced tax rate for dividends from US corporations – says a member of the XTB Board of Directors.
– In general, clients use different asset classes, often switching between them seamlessly. Interestingly, stock market clients are keen to invest in stock CFDs – choosing to sell whatever assets they choose. Currently about 25%. all clients start trading with us, choosing stocks or stock futures – emphasizes Marcin Niewiadomski from TMS and Oandy.
Brokers coming from the forex/CFD market entered the trading zone with a bang. XTB gives you access to stocks and ETFs, without any commission (up to 100,000 EUR per month). At TMS Brokers, there is also no commission on transactions in foreign markets. In the case of the WSE, it is 0.19%, while the standard rate at traditional brokerages is 0.38%. In its new offering, Conotoxia charges a commission of 0.2% for opening a trade, and there is no minimum commission in this case. For the Polish market, it is 0.09%. with a minimum commission of 10 PLN.
Of course, more analytical features or facilities always speak for traditional brokers. However, forex companies announce further expansion.
– We are actively working on the development of our stock offer and in the near future we want, among other things, to allow investments in Polish and foreign securities already at the IPO stage – says Kaczmarzyk.
– We can reveal that we are at an advanced stage of work to extend the offer to new European and global markets. It is very important not only in what to invest and under what conditions, but also how to develop your skills, which is why we are developing our educational offer, wanting our clients to be up to date with the changes taking place in the world markets – says Marcin Niewiadomski. So for now, the battle between traditional brokers and forex/CFD brokers is in full swing, and the stock market is the battleground today.
Traditional brokers regain their core business
There have been times when virtually all major traditional brokerages had the forex market in their service lineup. However, the plans of many of them were quickly verified and today access to this market is no longer so popular.
At one time, access to the foreign exchange market was offered by companies such as BM PKO BP, BM ING Banku Śląskiego, Santander BM or Noble Securities. Sooner or later, all the above-mentioned entities quit providing services in this area or decided to sell this business to other entities. The forex / CFD market has also become extremely demanding for intermediaries. On the one hand, traditional brokers had to face competition from specialized entities which, in many cases, even technologically, were clearly ahead of them, and on the other hand, regulation also made his work. We are mainly talking about the restrictions on the amount of maximum financial leverage, which were first introduced in Poland, and then also throughout the European Union.
As a result, the number of traditional brokerages that continue to operate in the forex / CFD space has clearly decreased. Today, this service only exists in three companies: DM BOŚ, BM mBank and BM Alior Bank.
So now the forex/CFD market is somewhat returning to its roots. Specialized entities remain the main players. Traditional brokerage offices and brokerage houses mainly focus on their core business, where competition is also intensifying.