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#1 26-03-2020 16:25:14

johnedward
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From: Paris - France
Registered: 21-12-2009
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Coronavirus and Forex: how are the brokers doing?

Coronavirus and Forex: how are brokers doing?


Increased volatility is leading to increased volumes for brokers.


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Last year was a rather lackluster year for forex brokers, with low volatility and a tightening of the regulatory environment resulting in lower trading activity. This year, however, is turning out to be a very different year so far, as the rest of the world feels the pressure of the virus panic, and the crisis has brought volatility back to the markets.

Are brokers benefitting from the Corona virus?

The new virus has given a boost to operations and has enabled brokers to significantly increase their volumes from 12 months ago

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Volumes on the rise as the Corona virus situation wreaks havoc

Jeff Siou, head of ATFX, says that as the virus situation spreads, traders are becoming more active on all of their trading platforms.

"The financial markets have been very volatile in the past few months, which has created tons of trading opportunities for scalpers and other short-term traders. Many of our traders have profited from large price swings in the major financial markets, including currencies, indices, commodities and cryptocurrencies", says Siou.

Fabian Chaou, a global risk manager at ADSS, says that the levels of volatility that we are seeing in the markets have never been experienced by certain traders during their careers.

"The increase in volatility is unprecedented, due to the combined supply and demand shocks. The escalating situation and the severity of Corona's grasp on society have caught the market off guard, which has resulted in a significant increase in trading activity", says Chaou.

At eToro, the current climate has resulted in a clear surge in website traffic.

New virus puts investing in the spotlight

Yoni Assia, managing director at eToro, says: "Due to increased volatility, there's an undisputed increased interest in financial markets and in trading by small investors. Stock markets have plunged lately, ending a long rally and we are also seeing increased volatility in raw materials, especially crude oil."

"This creates a lot of news and investing is now falling under people's radars. We have seen a 25% increase in website traffic as people want to find a simple and easy way to access information and trade off of this info."

Jens Chrzanowski of Admiral Markets says that his clients have capitalised on these quickly shifting markets.

"Admiral Markets is mainly aimed at active traders who aren't looking to make long-term investments. They trade and scalp short-term market movements. Thus, with these large market movements, our traders bought and sold a lot, which led to a significant increase in transaction volumes compared to the first 2 months of the year", says Chrzanowski.

How are volumes compared to last year?

While it is important to keep in mind that the new virus has resulted in a sharp increase in trading volumes, other factors are to be looked at. The oil price war between Russia and Saudi Arabia has also increased volatility, and last year ended at a peak, with end-of-year volumes higher than normal due to the FED's tightening policy and the US/Chinese trade situation.

However, it cannot be said that the new virus isn't to be credited with these rising volumes. How are these volumes compared to the same period in 2019? At ATFX, they managed to record double the transaction volumes of 2019 in all the regions where it is present.

"The year started with volatile Asian markets as the Corona (virus, not the beer!) hit these regions hard and forced them into foreclosure measures. The situation worsened last month, when more and more countries started to quarantine their citizens to try to stop the spread of the virus. ATFX continues to implement its business continuity plan globally during this situation to ensure that we continue to provide a great trading environment to our traders", says Siou.

And according to staff at eToro, the surge in trading is even more pronounced...

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