Investment Trends Highlights Growth in Spain, Regulatory Challenges Persist

The market was the second fastest growing in Europe last year - new regulations could change that.

Lately, research company Investment Trends has been posting its newest online trading reports for forex and CFD trading. The company has just released its latest report on Spain, showing the results of a study conducted among 5,900 traders and investors in the country back in April 2017.

According to the results of the survey, while the Spanish market remains relatively small, it retains the potential for strong growth. The survey was conducted during the month of April which is right after Spanish brokers were warned by local regulatory authorities to display additional risk disclaimers for retail traders.

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At the time of the introduction of the changes by the Spanish financial regulator CNMV, brokers and platform providers expressed worries about the implementation of the changes.

Key Findings about Spanish Market

Nevertheless, the study shows a small market that has potential. The market is relatively fragmented due to high switching activity and the best acquisition channels are word of mouth, comparison between websites and social media.

About 36,000 unique traders from Spain executed CFDs or FX transactions in the past 12 months. The figure is up 13 percent year on year with inflows of new traders and dormant traders returning to the market numbers being flat.

Less than one in four of those who were active during the previous year have left the market, which is a very high retention rate. Among the eight geographies which Investment Trends surveyed, Spain has the lowest rate of client dormancy.

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Commenting on the study’s results, Irene Guiamatsia, Research Director of Investment Trends, said: “By headcount the Spain CFD/FX market is half as big as Germany, but penetration as a ratio of adult population is identical. Last year’s growth makes Spain the second fastest growing leverage trading market among the eight markets surveyed by Investment Trends.”

According to the study’s results, prospects for an increase in next generation traders have increased from last year. According to Investment Trends, new traders commit a substantial proportion of their portfolio to CFD and FX trading.

One in Six Traders Switched Providers

Switching activity in Spain declined somewhat, but the probability of a trader changing his/her brokerage remained quite high when compared to other markets. Last year’s results were distorted due to the exit of Interdin from the market.

“With many clients moving between providers, the competitive landscape remains fluid and the market extremely fragmented,” explained Guiamatsia.

Due to the high switching activity there is no clear leader on primary market share. The unique conditions provide to brokers an opportunity in the market, where personal recommendations are the top reason for opening a brokerage account.

“The role of word of mouth as a ‘deal clincher’ cannot be overstated. Irrespective of their trading experience, Spanish traders say that advocacy from a friend or a relative prompted their provider choice,” said Mrs Guiamatsia.

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