Head of Business Development at FXOpen Natalia Zakharofa talks about zero commission trading that has been implemented by many brokers nowadays.
In recent times, Forex and CFD brokers have followed the trend of commission-free trading while introducing zero commission in stock CFDs. Natalia Zakharova, Head of Business Development at FXOpen, shares her views on the matter.
According to Zakharova, the emergence of brokers who start offering commission-free trading will actually complicate competition by charging commissions. Commissions can indeed be included in the spread, however, from a trading perspective, it is still better to trade with tight spreads and separate commissions. Brokers still have to gain money because of the large operating price of the company, including the costs of maintaining licenses, client support, software, and so on.
"I believe that this Zero Commission trend is a marketing tool used to attract more customers. Moreover, it’s not in line with the recent regulators’ efforts to make sure that the clients understand financial markets and the risks involved. Every forex trader must be aware that a broker acts as an intermediary between the clients and the counterparty against whom the trade is being matched", the FXOpen executive continued.
Natalia Zakharova adds that there are cases, albeit implausible, when a broker decides to offer commission-free trading at its own expense, with a view to compensating for it by increasing the commission later.
One of the many brokers joining the trend of commission-free trading besides FXOpen is FXCM. FXCM compensates in a variety of ways, such as adding a mark-up to spreads received from liquidity providers and rollover fees.