Retail brokerages are deploying a two-stage client acquisition strategy, using simplified products to onboard users before monetizing through higher-margin leveraged instruments, according to recent industry disclosures. XTB revealed that nearly 39% of new EU clients begin with shares, 28% with ETFs, and only 17% with CFDs, yet CFDs generated 96% of its PLN 2.07 billion first-half revenue from financial instruments despite being a minority entry point. The firm added over 703,000 new clients in the period.
IG is pursuing a similar funnel in the US through its proposed $1.3 billion acquisition of Underdog, aiming to convert sports prediction market users into derivatives traders via tastytrade. Robinhood’s event contract revenue surged tenfold year-on-year to $156 million in Q2, demonstrating how quickly alternative products can scale within established platforms.
The trend reveals a growing disconnect between client acquisition channels and revenue generation, with firms betting on accessible products to build user bases before cross-selling complex instruments.
FXnCO Insight
Brokers expanding into prediction markets and simplified products are prioritizing user growth over immediate monetization, signaling intensified competition for retail market share.
Source: Finance Magnates