They are not exactly over , because you cannot teach an old dog new tricks and certainly there are many old dogs still in this market. BUT the “Churn & Burn” has run its course as a profitable business strategy & tactics.
Is the new EU regulatory framework going to make such a practice on part of brokers much more difficult? Yes, and that’s not only because of the new regulations , but mainly because the too many burned customers by the market and bad brokers never return to the markets to spread the word about their bad experiences. We have to admit that the industry has a bad name & the easy days of attracting new & innocent customers are gone.
The moment of truth has come for the brokers & the big question to them is : “WHAT IS their value to their TRADERS besides good execution” something which is already commoditized.
Much more sophisticated effort is needed to attract & retain customers.
So the brokers need to change the product mix, their business model & the message they convey to their customers.
There is a very big trend out there, I guess everybody has heard about it and we could call it “the democratization of tools” and it refers to the greater availability of AI & machine learning algos, data & tools to the average user at a very reasonable & sometime zero cost. That’s a very big trend in all kind of businesses & in the trading business is the next new “new thing”. Its still early but the competition for the best trading tools & platforms will intensify the next years .
We ‘ve been already seeing this in our brokers & funds customers who ask for AI & machine learning tools for their proprietary trading desks & some of their most valuable clients.