The Australian contracts for difference (CFD) market shrank by 14 per cent over the year ending May 2016, according to Investment Trends.
The decline in CFD trading came despite increased market volatility, which Investment Trends senior analyst Irene Guiamatsia said normally energises the CFD market.
“The decline in CFD trader numbers is somewhat surprising in the face of reignited market volatility and healthy client inflows,” she said.
The number of first time CFD traders entering the market was similar to last year, but Ms Guiamatsia noted that “many previously active clients stopped trading as they struggled to identify good investment opportunities”.
She added that the number of CFD traders looking to switch providers has increased, growing from 35 per cent last year to 44 per cent this year.
Investment Trends found that one third of those looking to switch have yet to decide on which provider they would move to.
“There is a clear need for providers to uphold the highest possible standard of service to keep their clients happy, while client acquisition opportunities abound for those who are better able to showcase their value proposition to traders open to making a move,” Ms Guiamatsia said.