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#1 02-09-2019 09:20:27

johnedward
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Most brokers won't opt for multi-asset trading in the short term

Most brokers won't opt for multi-asset trading in the short term


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Many brokers are considering offering trading of multiple assets to survive the consequences of the ESMA's harsh intervention measures.

Some claim to offer "multi-asset" products when in reality they only offer trading of CFDs on a few different asset classes. However, over the last year there has been a lot of talk about the possibility for brokers to add stock trading to their offering.

Some brokers like JFD Bank, eToro and XTB have managed to do it:

Arrow JFD Brokers has launched zero-commission trading of shares
Arrow eToro has eliminated stamp duty on UK stocks
Arrow XTB has launched commission-free spot trading

However, many brokers still haven't added share trading to their offer - because such an offer also requires a major investment on their behalf.

Handling of data

One of the biggest issues faced by companies is data. Stock market data licenses are both expensive and, from a legal point of view, complex.

"The stock exchanges are now aware of the private trading industry and have changed their approach by introducing new policies as well as licensing fees," says Ralph Hanah, a former London Stock Exchange member who now provides consulting services.

This last point is particularly important for brokers that want to introduce the trading of stock CFDs.

Brokers who want to offer share trading typically need some type of white label deal with another company because they are not members of the stock market. They often have to partner with other brokerages to access the stock markets.

"Some of our clients are looking at the possibility of adding share trading and find that the best they can achieve this is to create a white label", says an industry executive.

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No trading platforms

Some brokers want their traders to be able to access shares via MT5. However, technically speaking, this platform isn't quite in tune with the trading of shares.

"MT5 isn't ideal for share trading," says the industry executive. "Take the search function, for example. On MT5, you can't look up a company's name, only the ticker symbol, which you can look up on Yahoo's search engine."

Also, many brokers simply haven't adopted MetaQuotes' MetaTrader 5 trading platform. MT4 is still the industry standard, and it still has a great future.

Stock trading on MetaTrader 4 is possible via APIs, but the platform hasn't been designed to give users direct access to the world's stock markets.


"Anything worth having is worth going for - all the way." - J.R. Ewing

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