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A somewhat critical component with regard to retention and client engagement, social trading networks have undergone something of an evolutionary period of late. The entire technological modus operandi has morphed from brokerages taking on auxiliary services from social trading providers which work in congruence with existing trading platforms, remunerating them with a pip increase.
This model, however, has become somewhat passe in these days of direct market access retail FX trading, and instead of performing a similar role to introducing brokers, the functionality of social trading platforms has become increasingly integral to trading platforms themselves.
The latest firm in the recent line of retail electronic trading companies to move away from external providers is London-based firm TradeNext, which discontinued its registration with independent social trading network TradeCrowd on September 12.
This in turn brings TradeCrowd to a further development, in that the social trading platform is now registered with the Financial Conduct Authority by having migrated to an FCA umbrella provided by FINSA Europe.
The copy trading platform emerged in the fall of 2013, and at the time was registered with the UK regulator as an appointed representative of TradeNext. Since September 19, 2013, TradeCrowd Technology Ltd had had the status as such a representative (ref No 607527), thus promising its users an extra layer of protection and security. The representative status is preserved under TradeCrowd’s existing FCA number, now serving as a representative of FINSA Europe.
An investigation by LeapRate has shown, however, that the registration expired on September 12, 2014, with the the company no longer in the list of appointed representatives of TradeNext, but listed as an appointed representative of FINSA Europe with current status.
New dynamics within social trading such as this example come as social trading becomes an increasingly challenging area for the retail FX space, with competition rising and regulatory demands tightening, including discussions by the FCA which could require social and copy trading systems and their lead traders to be registered and supervised as financial advisers.
This summer saw IBFX discontinue its social trading platform Connect, whereas ambitious China-focused LigaForex ceased its entire operations.
TradeNext offers its clients an alternative to TradeCrowd in terms of copy trading: Myfxbook’s AutoTrade, which was added to the lineup of the broker’s services in January 2014.
LeapRate’s attempted to contact TradeNext in order to ascertain its future direction with regard to social trading, however no comment was proffered.
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