UK retail trading platforms witness renewed demand

Bloomberg

A volatile start to the year for global stock markets is breathing new life into UK trading platforms, which had seen fading interest amid less stringent pandemic restrictions.
CMC Markets Plc and IG Group Holdings Plc both said they’ve seen an increasing number of bets being placed on equity markets amid price swings that put the S&P 500 Index on course for its worst month since March 2020. Headlines on tightening US monetary policy as well as geopolitical tensions in eastern Europe have been a “call to trade,” according to CMC’s deputy Chief Executive Officer David Fineberg.
“As markets are interesting, people are trading,” June Felix, chief executive at IG Group, said in a phone interview. Both firms offer contract-for-difference products that allow clients to bet on market moves without owning the underlying securities.
Retail trading firms around the world got a boost during pandemic lockdowns, as the combination of volatile markets and customers stuck at home — with more time on their hands and, in some cases, extra cash to spend spurred —demand for platforms like CMC’s and IG’s. The so-called meme-stock craze that spurred huge rallies in shares such as retailer GameStop Corp. and cinema group AMC Entertainment Holdings Inc. also added to trading volumes.
While retail trading activity has ebbed as the pandemic evolves, the market fluctuations seen this year have been a new boon for the platforms. Volatility has spiked since the turn of the year, with the Cboe Volatility Index — also known as the VIX — jumping more than 80%. That has provided more opportunities to speculate.
Data from investing platform operator AJ Bell Plc, meanwhile, suggest the retail crowd is buying the dip in some US technology stocks amid earnings reports. Tesla Inc., Netflix Inc. and Microsoft Corp. are among the top 10 purchases on the site this week. Retail accounted for 18.5% of trading in the US in the fourth quarter, down from 24% in the first quarter of 2021.