For the conservative investor among retail FX traders, if indeed there is such a thing, Australian FX firm AxiTrader is preparing to pay increased interest on deposits, which, in these times of low bank interest rates, thus appealing to traditional investors rather than the risk-hungry audience attracted by bonuses.
Interest will be increased on deposits held with AxiTrader from 1st January, 2015, which according to the company may see some AxiTrader customers double the amount of interest they receive.
To date, every AxiTrader customer with an AUD denominated trading account received a bonus monthly interest payment on their free margin balance, regardless of the amount. This was the same flat rate across all accounts.
With the new structure, AxiTrader will be paying out a higher rate of 1% (which is equivalent to the Royal Bank of Australia Base Rate minus 1.50% p.a.) to all AUD denominated trading accounts that have minimum equity free of margin of AUD$10,000 or more.
This serves as a potential means of attracting customers with a potentially higher lifetime value, as well as performing an important role as a retention tool, whereby customers may leave their deposit with AxiTrader rather than withdraw it to a bank which pays lower interest, even in times of lower volatility during which a trader may reduce his activity.
If a client holds a trading account with a balance of over $10,000 (Australian dollars), then this will automatically take effect, whereas clients with less than $10,000 (Australian dollars) will no longer receive monthly interest payments. This serves as a method of ensuring that AxiTrader encourages clients with larger deposit amounts to select the firm for their trading requirements.
AxiTrader’s use of interest payments to engender longer term business is interesting, however it is not the first time that a retail FX company has offered such a system, with Liquid Markets having done away with bonuses in favor of paying interest to clients on their deposits in May this year.
For the full announcement from AxiTrader, click here.