The retail CFD industry continues its structural shift away from currency trading, with FX pairs representing just 13.7 percent of broker volumes in Q2 2024 compared to 26.8 percent a year earlier, according to FM Intelligence data released this week. Monthly foreign exchange volumes across tracked brokers fell from 6.4 trillion dollars to 4.2 trillion, while CFD trading on indices, commodities, equities and cryptocurrencies surged from 17.4 trillion to 26.3 trillion dollars over the same period.
Market concentration is intensifying as the top five brokers including EC Markets, TMGM, IC Markets, IG Group and JustMarkets now control 41.8 percent of named broker volume, up from 38.4 percent at end-2021. Strikingly, FX represents only four percent of their combined turnover, down from 10.9 percent a year ago. The industry contracted 9.3 percent quarter-on-quarter, though the median broker experienced steeper declines of 12.6 percent as only EC Markets and TMGM bucked the downturn.
Analysts attribute the shift to client interest following price movements in metals, equities and crypto rather than currency markets. For retail brokers, this trend poses revenue diversification challenges and may require technology upgrades, expanded product licensing, and revised risk management frameworks to accommodate instrument classes with different liquidity profiles and margin requirements than traditional FX.
FXnCO Insight
Brokers heavily reliant on FX spreads face margin compression and must rapidly expand multi-asset capabilities or risk losing market share to diversified competitors capturing flows in higher-volatility alternative instruments.
Source: Finance Magnates