Online trading platforms: Challengers taking the industry by storm

Online trading platforms have had a high-profile year in the media with platforms such as Robinhood receiving increasing amounts of (at times unwanted) attention following the rising popularity of so called ‘meme stocks’, the growth of the crypto sector and the market fluctuations that were stimulated by the pandemic.

While some of this media attention was negative, the penetration of these platforms in to the mainstream has been a theme that has been present throughout the last 18 months. CNBC recently reported that 15 percent of all current retail investors started during 2020.

The pandemic has opened these businesses up to an entirely new audience with many consumers taking to trading for the very first time, investing the savings they have been able to make throughout the pandemic. According to the FCA this movement is being driven by women, the under-40s, and people from a black, Asian and minority ethnic background.

Will the popularity of these platforms continue after the pandemic is the question on everyone’s lips and how will they handle the inevitable reputational difficulties? Here we shine a spotlight on four of the online trading brands with a good chance of staying the course.

Trading 212
Founded in 2004, Trading 212 were one of the early movers disrupting and democratising the stock market. Offering consumers cost-effective and easy access to the financial markets via their mobile app, the business enables millions of people around the world to invest in stocks, ETFs and CFDs.

Unlike some of its competitor online trading platforms, Trading 212 offer no minimum deposit limits thereby further removing the traditionally prohibitive cost barriers to entry for many consumers to the financial markets. Historically the business has marketed itself as commission free but have recently added a 0.15% conversion fee for all FX trades. While met with some controversy this is still one of the lowest on the market.

Eagle-eyed sports fans may be familiar with Plus500 due to their sponsorship of La Liga champions Atletico Madrid. Specialising exclusively in CFD trading, the business reported record revenues of over $560m last year. CFDs are most popular during times of extreme market volatility so as normality begins to return it is perhaps unsurprising that in the firm’s latest figures, revenues had decreased to just shy of $350 million.

This figure is still higher than the business’ pre-pandemic levels but as the online trading market becomes increasingly competitive many observers will be keeping a close eye on the moves the business takes to increase customer acquisition and ensure its stock remains boom and not bust.

The recent recipients of over £22m in investment, Australian founded Stake might be the new kids on the block in the UK but they’re not letting that slow down their ambitious growth plans. Offering only US stocks, Stake’s commission free service sets them apart from several of their rivals and CEO Matt Leibowitz has been incredibly vocal criticising the competition.

Describing the FX fees of many firms in the space as ‘ridiculous’ and the efforts of many other challenger brands as ‘making things worse’, Leibowitz is certainly bold and this strategy is helping the firm attract increasing attention from UK investors.

ETX Capital
Another business specialising in CFD Trading, ETX Capital is one of the fastest-growing trading platforms in the UK. The business is regulated by the FCA and was recently awarded the Best CFD Provider at the ADVFN International Financial Awards 2021.

2021 has got off to an exciting start for the firm, consolidating this awards success with the recent acquisition of FinTech start-up Oval Money and the launch of its zero-commission stock trading offering. This launch will enable investors to trade blue-chip stocks such as Amazon, Apple and Tesla totally commission free in addition to the firms already broad CFD offering.

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