Retail Trading Volumes Falling Post Covid-19?

Retail brokers around the world who regularly report financial results and operating metrics have shown a delightful picture in terms of the rapid growth of key financials and metrics as the world began to grapple with the Covid-19 pandemic and global markets became extremely volatile.

Now, as many of the world’s regions begin to recuperate from the effect of the global pandemic and some financial markets begin to also recover from their lows, retail FX and CFD trader activity looks to be affected again in a negative way.

For example, Gain Capital Holdings Inc (NYSE:GCAP), which operates the popular FOREX.com brand around the world has just reported disappointing operating metrics for May. Specifically, the broker booked $179.3M in OTC trading volume for the month, which is almost half of the volume generated in March 2020 when the pandemic and market volatility was in full swing. Furthermore, the broker’s daily volumes have also fallen back to pre-COVID levels and totaled $8.5B average daily volume. At the same time, the broker has maintained a large increase in new retail accounts- a growth of almost 20% since February 2020.

As such, we see that growing a retail accounting base is only part of the revenue capture and growth challenges facing brokerages. With the global economy picking up steam, securities, and equities markets erasing their recent losses (for example, in the US), traders look to be hesitant to continue trading in the volumes they had been just a month or two ago. This trend will be important to understand the immediate impact to large retail FX and CFD brokers later in 2020, as we continue to recuperate from COVID disruptions.