'Instividual' investors switch on to FX

One area of the foreign exchange market that appears to be continuing on a healthy growth trajectory is retail FX trading, according to research released last week.

A survey of 501 online investors carried out on behalf of Barclays Wealth between September 18 and 24 revealed a marked increase in trading of foreign exchange, contracts for differences (CFDs) and exchange-traded funds in the past year, as online investors diversified portfolios to protect against market volatility.

Of those surveyed, 30% said they were already trading FX, 26% were spread trading and 14% were trading CFDs. This marks a 6%, 9% and 5% rise, respectively, on the previous year's comparative survey.

Barclays Wealth said investors have been taking advantage of the extreme levels of volatility in the currency markets. On Monday, October 13, for example, the most heavily traded pair on the Barclays Stockbrokers FX platform was GBP/USD, as clients reacted to falling sterling. In September, volumes in FX trading doubled month on month. No notional value figures were provided.

Barbara-Ann King, head of proposition at Barclays Stockbrokers in London, said the company has seen providers on the supply side meeting the changing needs of investors by making available the products and services that were once the preserve of traders at financial institutions. She said they had seen a convergence of markets in equity and foreign exchange trading, which has resulted in price parity and private investors getting the same transparency institutions benefit from.

"In line with this, we have seen our clients becoming increasingly sophisticated over the past year - for example, on October 13 we saw double the number of open buy trades (longs) on CFDs compared with short trades (open selling)."

The research also found that one in 10 online investors trades over £5,000 and 21% trade between £1,000-2,000.

Des Byrne, head of Barclays Stockbrokers in London, said that, with markets set to stay rocky for some time, his firm expects the 'instividual' investor will continue to grow in confidence and employ institutional techniques to achieve returns.

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