Axi joins no-fee trading craze as it launches stock CFDs
Commission-free trading appears to be the trend that isn’t going away, and Axi (formerly AxiTrader) is the latest company to join the race to the bottom. To stay competitive, the multi-regulated broker is slashing its brokerage fees on stock CFDs to zero.
Starting August 26, Axi would eliminate commissions for leveraged Share CFDs that follow the fortunes of 50 top stocks from US, UK, and European markets.
Axi is a business name of AxiCorp Financial Services Pty Ltd which represents a group of companies regulated by the Financial Conduct Authority of the United Kingdom and the Australian Securities & Investment Commission.
The news comes as the company celebrates the first anniversary of its multi-year partnership with Manchester City Football Club.
On the addition of the new trading products, Louis Cooper , the Axi Chief Commercial officer says “We’re extremely focused on helping traders find an edge in the markets, and Share CFDs will deliver a lot of high-quality opportunities for our clients.”
Axi CEO Rajesh Yohannan added: “The great thing about Share CFD trading is the ability to leverage your trades, using a relatively small amount of capital to gain full exposure to the trade.”
“Share CFDs are great standalone trading opportunities, but once you bundle in our no commission service and promotional offers it’s an extremely compelling package. We expect a lot of interest from both existing clients and new traders looking to find an edge with a trusted broker,” Yohannan notes.
Many firms are now using cheap or free trading to attract clients to more profitable businesses. For now, they can keep their free platform afloat through making compromises to some business aspects such as not spending on massive promotional campaigns.
Eight years after Robinhood launched with no-fee trading, almost all major brokerages have caught up with a wave of fee-eliminating announcements over the last two years.
The zero commissions, understandably, have driven massive increases in trading volumes and helped incumbent brokers capitalize on a new class of retail investors. But, despite an influx of dummies and a dramatic spike in trading volume, the move will ultimately prove painful, and the revenue give-up will not be easy in the long term.
The trading revenue did not take the hit so far as a drop in commissions was offset by record volumes. While retail investors may have increased their trading activity thanks partly to $0 commissions, the major factor behind record volumes was Corona-spurred market volatility and stay-at-home orders.
Sooner or later, brokers will feel the heat as economies re-open, people go back to work and volatility dies down. In other words, brokers may not see the explosive growth in 2021 that saved trading revenue in the previous year.
If that happens, the move to zero commissions by industry players would require a larger shift in the business model for many of these low-cost brokerage firms.