FCA-registered multi-asset electronic trading firm City Index embraces social trading as British authorities prepare to classify such systems as investment managers
Social trading and copy trading networks gained extensive attention from all participants in the retail trading field last year, mainly due to their established presence and proven means of engaging customers and improving lifetime value, thus reducing the cost of client retention.
City Index, one of the UK’s multi-asset CFD and spread betting companies, has now joined the social and copy trading fold by releasing its own in-house social trading platform, which arrives on the market under the designation of City Connect.
A particularly interesting move by City Index, the Beta version of the platform is now available as a proprietary system which allows City Index traders to interact with each other. This counteracts the general trend toward broker-neutral social trading networks which have begun to prevail in the retail FX market.
It is worth considering, however, that British financial markets regulator, the Financial Conduct Authority, has set forth its intention to regulate such platforms, therefore deeming lead traders to perform a similar role to financial advisers, and that copy trading platforms should be categorized as investment managers.
By developing and maintaining an in-house platform which is specific to City Index clients, the task of ensuring compliance and regulatory matters are addressed efficiently by City Index may be somewhat easier than if its clients were utilizing a third-party, broker neutral system.
Joshua Raymond, Associate Director and Chief Market Strategist at City Index explained to LeapRate today that “City Index Connect is currently in beta stage but early indications from our client base has been tremendously encouraging.”
“Our clients have found our latest platform extremely useful not just in a sense of understanding what trades are going through our systems in real time, but also the ability to connect with other like-minded traders to discuss their strategies and market views. In due course we are looking to expand our Connect offering to enable greater trade flow visibility and interaction with other traders” concluded Mr. Raymond.
City Index has increasingly concentrated its efforts on engaging a client base that is relatively experienced and may generate longer lifetime value; an important facet at a time when acquisition of clients via media advertizing is highly expensive and can be ineffective. Last month, LeapRate attended City Index’s representative office in Israel, where prospective clients are often invited to presentations regarding the company’s products, which are explained in great detail by Managing Director Meir Velenski representing an intelligent approach to client acquisition.
The company explained at the time that it usually experiences approximately 70% conversion rate from such seminars, and it was clear that the majority of attendees were experienced traders with substantial experience under their belt.
Indeed, whilst the drawback of in-house social platforms such as City Index’s somewhat limits the network of traders to those trading at that brokerage, whereas platforms such as Leverate’s Sirix social platform connect traders among multiple brokers, in light of imminent regulatory rulings in the UK, as well City Index’s penchant for attracting clients via other means than simply media advertising, there is most certainly merit in this methodology.