Recently OANDO Corporation, a Canadian FX company with a large portion of its core business located within the United States, purchased the American social trading network Currensee.
Social trading has become big business for retail firms because of its ability to lure in novice traders. Social trading platforms also bring in customers who have never attempted trading before. Well established social trading networks are seeking new and diverse ways to expand their business models as well.
Recent research shows that there are around 235,000 users of social trading and that nearly $240 million dollars of customer funds are involved. In addition to Currensee, Myfxbook, eToro, Tradency, and Zulutrade are the other major social trading platforms. During a researched five year period 600,000 people were involved with social trading. The largest trading markets were located in Japan with 30% of all of the social trading, and Europe and Russia both had a 15% share of the social trading market.
After the financial crisis of 2008 the United States government began making changes to the regulation of how all financial products are sold. There has been particular focus on how FX firms provide off the exchange (OTC) trading services to their clients. This new regulation has left the domestic US retail FX market stagnant.
OANDA’s decision to purchase Currensee, an existing social trading network, may stem from Currensee’s international client base. OANDA appears to be trying to widen their customer base beyond North America into the international trading market, and also trying to diversify their means of creating revenue.
Copytrading is a new method of trading where novice and intermediate traders can copy the trading behavior of experienced Forex traders from around the world. Currensee refers to these more experienced traders as “trade leaders” and the copytrading arena is experiencing massive growth. Copytrading also allows for individual traders to share research data and collaborate with each other.
In a statement about OANDA’s recent acquisition, CEO K. Duker, said “Like OANDA, Currensee has a strong business vision coupled with an expert engineering pedigree. We are committed to continue serving the needs of all Currensee customers, Trade Leaders and partners, and look forward to making OANDA’s competitive spreads and superior execution available to this new group of traders.
The Currensee platform will be available to all OANDA customers soon and a notice will be delivered once the technical teams have it all completed. Dave Lemont, CEO of Currensee said that “We are very excited to be part of this larger venture, and believe that our customers will find dealing with an established broker like OANDA most beneficial”. From the looks of things this arrangement should be highly beneficial to Currensee and OANDA’s customers both present and future.