There is a race going on within the Financial Investments space and specifically in the Mirror-Copy-Social trading space. It is happening in the highly liquid and voluminous space of FX and in the traditional, more popular Equity and Fund space.
The financial market structural changes and conditions make this trend, even more interesting. We are in the midst of currency wars, deleveraging of the private sector and leveraging of the public sectors, and low interest rates coupled with rising volatility.
The Mirror-Copy-Social trading innovation has the possibility of creating new alpha, offering a better customer experience, snatching away a large part of the financial advisory business from both the large firms and the independent advisors, cultivating a Do-It-yourself investment and trading culture, or maybe nurturing a new kind of bread of Day-traders.
Mirror-Copy-Social trading ventures are popping up via startups all over the world but also from within traditional well positioned trading platforms and online brokerage firms. Financial institutions and asset managers are shyly overlaying such services by striking partnerships with the “outside” players.
The target audience of Mirror-Copy-Social trading offerings is also evolving. The potential benefits and the lurking risks to the end users needs to be understood and also, the incentives and the rewards for the Copied traders. There is already a geographical fragmentation that has naturally occurred in this market.
Regulators have already set some basic guidelines as to which businesses need an investment advisor license and in which jurisdictions they can operate.
In this article I will examine the current status of the Mirror-Copy-Social trading space and highlight the differentiating factors in the offerings of the players.