Adoption of mobile FX trading gathers pace
Some of the biggest retail FX brokers are reporting a surge in mobile trading activity that is only set to continue as mobile applications become the dominant venue for FX trading.
From a slow start with basic HTML-based user-interfaces five years ago, the explosion of smartphones and tablets has seen retail FX trading quickly move into a paradigm where clients expect to trade on-the-go using their mobile devices. Early entrants Saxo and Oanda, which first developed web-based mobile clients as early as 2007, are investing heavily to offer their customers mobile access that is no longer a supplement to their regular desktop activity but a fully featured platform in itself.
“We see the move from stationary PC trading on to mobile and tablet devices as one of the most radical changes since the introduction of online trading itself,” says Henrik Dyrholm Holst, head of platform management at Saxo Bank, one of the biggest players in the retail forex market.
In December, Saxo launched iPhone and Android apps with an array of free financial market data and trading tools, and launched integrated trading in those applications in February. In June, the Danish bank will launch a tablet-optimized trading platform on the iPad. Already, the commercial uptake has justified the investment in this area, says Saxo.
By the end of 2011, trades coming through mobiles acccounted for 2.9% of Saxo’s total volume and in the last five months alone this has more than doubled, rising to 6.2% by May.
In 2008, the number of trades going through mobile devices was just 0.1% of overall volume and had only increased to 1.2% of total volume by the end of 2010.
Asia has been the fastest growing region for the uptake of mobile trading and is expected to lead the way in years to come, with Europe and the US closely behind and catching up.
“If the development continues one day not too soon, we may look back at the stationary PC with the same awe as a grandfather clock,” says Dyrholm Holst.
Oanda was one of the earliest players to take advantage of advanced mobile technology, launching fxTrade on the iPhone, iPad, Android and BlackBerry in May 2010. Oanda says Apple’s iPhone and iPad account for 60% of all mobile usage.
Data from New York-based broker, FXCM, also show's Apple operating systems dominate their mobile user base, with two thirds of mobile trades, placed via an iPhone or iPad.
FXCM's iPad platform was launched earlier this year that allows users to see live executable rates for over 56 currency pairs. The app offers interactive live charts with pinch and zoom functionality and multiple charting capabilties. Users can place and manage tades with simple and advanced order functions.
Activity via FXCM's iPad app has already risen rapidly since January, with trade volumes increasing an average 30% month over month. In April, users placed an average 7% of their April trade volume thruogh the mobile app.
Oanda declined to disclose exact trading volume data but has said a sizeable percentage of its active users are regularly logging in from a mobile device in addition to their online trading platform. The take-up of mobile trading has displayed strong growth during the past 12 months in particular, according to Trevor Young, mobile trading product manager at Oanda.
He expects this segment to continue to grow rapidly, as the market for smartphones expands around the world, data costs fall and internet speeds get faster. As technology capabilities grow, so will traders’ expectations and for this reason Oanda says it has no plans to curtail its investment resources in this area.
“Traders have been very vocal in asking for all the same features they access on a desktop to be available on their device,” says Young. “They are looking to perform some complex analysis on the go, such as charting indicators, set price alerts, access news – and we’re trying to give it to them.”
Oanda says it has seen a sizeable increase in mobile usage during commuting hours and on weekends compared to desktop usage, but view the mobile segment as a market still in its infancy with huge potential.
“[Traders] use it as a way to complement our online platform, but I predict that trend will reverse,” says Young. “We expect that around 90% of our retail trades will be initiated from a mobile device within the next five years and the online trading platform will be used to complement the mobile apps.”
These dominant trends in retail behaviour are likely to feed into the institutional market, although the timing is unclear, but as has been clear in e-commerce more generally, adoption rates have been driven by individuals rather than corporations. In other words, it is a bottom-up transition.
Currency trading should be no different. There has been much resistance by institutional clients and banks themselves to mobile trading. This centres around the issues of data security and the broad sweep of compliance.
As Troy Rohrbaugh, JPMorgan’s global head of FX, told EuromoneyFXNews in April, mobile trading is not a gimmick, anymore than buying airline tickets on your computer was 10 years ago. The US bank was the first wholesale bank to introduce mobile technology for its desktop platform Morgan Direct, and it was the first investment bank to offer order functionality to clients on BlackBerry, iPhone, Android and, most recently, the iPad.
While trading on mobile devices has yet to gain any real traction, JPMorgan clients can enter take profit, stop loss and market orders from their mobile devices, while other order types are amendable on mobiles, and their status is updated live. Execution, or order status, can be configured to be sent by email or by SMS to the customer. In addition, they can monitor them live on a mobile or desktop.
This year, JPMorgan intends to begin the roll out of other order types, including algorithmic strategies, as part of its continual development stream. Rohrbaugh says the firm has focused on its order flow as a way to enhance the end-user experience, by streamlining the myriad ways the bank takes and receives orders to and from clients.