Social Trading Platform Market 2022-2028 Forecast_

Social Trading Platform Market 2022-2028 Forecast_

Global Social Trading Platform Market Size, Share, & Analysis by End-User (Individual and Enterprise), and by Sales Channel (Online and Offline) Forecast Period (2021-2028)

Social trading is an emerging paradigm that enables a trader to share trading wisdom with other investors. A special type of social trading is copy trading, where less experienced investors (followers) are allowed to copy the trades of experts (traders) in real-time after paying a fee. The emergence of new financial technologies (Fintech) has helped bridge the digital divide of financial services, especially in terms of access to financial advising and wealth management services. The global social trading platform market was valued at $311.5 million in 2021, which is projected to reach around $12.9 billion in 2028, growing at a CAGR of 64.7% during the forecast period.

Recently there emerged a more disruptive type of social trading platform, represented by eToro, Zulutrade and Collective2. They provide a platform for traders to share their trading opinions as well as allow investors to observe and follow the actual trading (action) of peer traders on stocks, currencies, and cryptocurrencies. These social trading platforms have gained growing popularity by receiving multiple rounds of venture capital funding and the growing pool of traders on these platforms with over 13.9 million online retail traders as of 2021, according to the data published by BrokerNotes. In addition, eToro alone has attracted more than 9 million active users in 2021, mostly small retail investors, who are allowed to open an account with as little as $200.

Most of these social trading platforms are regulated. For instance, the Financial Conduct Authority (FCA) 2015 stipulated a rule that all traders in social trading need to comply with the MiFID II ruling to qualify as investment managers. A handful of these platforms are allowed to operate in the US market to serve the US residents, including Collective2, Peertrade and Zulutrade’s Forex and FXCM markets.

Market Segmentation

The global social trading platform market is segmented based on type, sales channel, end-user, and geography. Based on type, the market is bifurcated into copy trading and mirror trading. Among these, copy trading generated market revenue of $283.8 million in 2021 and is projected to reach around $11.8 billion in 2028, growing at a CAGR of 64.7% during the forecast period.

The proliferation of new copy trade platforms across the globe drives the segmental growth of the market. For instance, in October 2021, Alpha Impact, a social copy trading platform that features daily insights from expert crypto traders, announced its beta release today. Alpha Impact allows community members to connect with top-performing traders, copy their trades, access the latest news from crypto experts, and learn the art of crypto investing through masterclasses and guides. In turn, traders on the platform benefit from growing a follower base as trusted opinion leaders, which allows them to earn passive income from subscriptions and via a revenue share model that lets them earn a commission for each trade. Apart from this, the total copy trading volume generated in 2021 was $1.4 trillion. This volume is projected to rise to $64.8 trillion in 2028, growing at a CAGR of 66.9% during the forecast period.

Based on end-user, the market is segmented into individual and enterprise. Among these, enterprise generated market revenue of $293.7 million in 2021 and is projected to reach around $12.4 billion in 2028, growing at a CAGR of 65.0% during the forecast period.

Regional Overview

Geographically, the market covers the analysis of four major regions including North America (the US and Canada), Europe (UK, Germany, Italy, Spain, France, and Rest of Europe), Asia-Pacific (China, Japan, India, and the Rest of Asia-Pacific), and the Rest of the World.

Market Players Outlook

Top social trading networks (platforms) that enable copy trading include eToro, ZuluTrade, Ayondo, Tradeo, and more. For instance, eToro launched this feature in 2007 for followers to replicate traders’ trades. Compared with traditional fund management, social trading platforms provide much higher information transparency by sharing not only aggregated metrics but detailed trade-level information among traders. Many social trading platforms have gone to the extreme of publicizing all the trades of each trader. This complete information transparency policy is one of the main drivers behind the explosive growth of the user base in social trading.

The market players are adopting different growth strategies such as investment in technological advancement, mergers and acquisitions, partnership, and collaboration, among others to expand their footprints in the global marketplace. Additionally, many project startups of the social trading platform are raising funding for the development of this technology. For instance, in April 2021, Enso Finance, a project aimed at creating a dedicated social trading platform on the Ethereum network, raised $5.0 million. VC firm Polychain Capital and the Dfinity Beacon Fund are the major funders for the project. Additionally, the funding round involved participation from companies such as Multicoin Capital, P2P Capital, and Spartan Group, as well as angel investors from Synthetix, Messari, Aave and others.

 In May 2021, Darwinex, a UK-based social trading broker and asset manager has elaborated that its clients can now trade any stocks listed on NASDAQ, NYSE, AMEX, ARCA, CHX, IEX, EDGE, BYX, BATS, LTSE, MEMX and even PINK market centers. The stocks trading support will be added across existing Trader Workstation (TWS) platforms of the company, along with TWS-supported third-party platforms, such as NinjaTrader and MultiChart. With this extension, the company intends to expand its geographical reach across the globe.