(6)NCAs reported an overall decrease in the number of CFD retail client accounts, trading volume and total retail client equity over the three months from November 2017 to January 2018 (first period) in comparison with November 2018 to January 2019 (second period). The share of profitable accounts remained broadly stable when comparing these periods 8 . The average costs incurred by retail clients while trading CFDs, which appear to be less dependent on market conditions than the overall client outcomes, were significantly lower in the second period in comparison to the first period 9 . Average costs in respect of active retail accounts containing CFDs on cryptocurrencies fell disproportionately in comparison to others, though such accounts continued to incur higher costs than accounts with no cryptocurrency exposure. Finally, NCAs reported a sustained decrease in the number of automatic close-outs, the number of times accounts went into negative equity and the size of negative equity balances for retail client accounts 10 .
Recital 6
- 10 In the second period, the negative balance protection was applicable. However, market gapping can lead to the client initially being closed out at a price that creates negative equity, with the account then re-credited back to zero equity by the provider to meet the new requirement of negative balance protection. This was also the case for those providers that offered negative balance protection in the first period. ↩
- 9 This is consistent with observed decreases in total trade volumes on which spreads and fees are typically calculated. Average client equity increased slightly among active retail client accounts, though this was a significantly smaller change in percentage terms than the decrease in total trade volumes and total exposure for these accounts. ↩
- 8 The share of profitable retail client accounts increased in January 2019, a development that may be associated with market conditions. ↩