Thirteen useful notes on online trading platforms and the investment products they offer. What are the advantages that the investor can secure?

Three years ago, I published an article to restore the truth about what is said and sometimes written about “off-cycle” trading or, in other words, about investment products offered through so-called electronic trading platforms, a trend that is constantly growing because investors are realizing their redundancies.

So I pointed out – among other things – at the time:

First, “off-cycle” (OTC) markets increase counter-competition for the benefit of investors, who are ultimately the only ones who decide and choose.

Second, those who argue that the OTC market is often characterised by opacity and hidden charges are not aware of today’s modern reality (after the thousands of pages of ESMA guidance in recent years and the adoption of the MiFID II law in 2018).

Third, that trading in an “off-cycle” market is not an inferior function to that of the stock markets, but a different one. In fact, most of the time it is more advantageous for investors, with better transparency, costs and prices. That’s why their use is growing.

In particular, this is a normal operation called Dealers Market, as distinct from the Open-outcry/Auction System. More specifically, in the “organised market” of the members of an exchange, the price of an investment product is the result of the combination of the supply and demand of all investors participating in the market at a given time.

In contrast, in the OTC market, the price is agreed between an investor and a deal maker or liquidity provider, but where the investor is able to be constantly aware of the prices offered by both exchanges and other deal makers for the same product. In practice, the values are the same.

Fourth, there is a big difference in size. A few dozens of stock exchange companies participate in a small and medium-sized European stock exchange, with an average daily trading value of tens of millions of euros, while through the “unorganised” foreign exchange market (FOREX) hundreds of thousands of participants execute daily transactions in the order of 1 trillion euros. euros! Also, bonds traded outside regulated markets around the world have 20-40 times the trading volume of shares traded inside regulated markets.

So, while I was writing this three years ago, I come back today to answer a number of questions that I have been asked and, most importantly, to inform the investing public about things that they are often not sufficiently informed about, due to ignorance or the narrow interests of competitors.
So here are a few more important things that investors need to know:

1. The online platform enables investors to invest in all global markets with small or large capital (no minimum amount) through CFDs. CFDs are contracts for difference and give the investor the outcome of the product’s course. The prices are the same as on the spot market. The wide range (more than 1,000) of Greek and international products enables the creation of a portfolio that includes all financial products (with or without correlation) traded in all international markets. The underlying products are in stocks, commodities, bonds, metals, currencies and stock market indices.

2. The electronic platform is supervised by the Hellenic Capital Market Commission. The Co-guarantee protects the investor in case of a member’s default up to 30.000 €. In addition there is negative balance protection.

3. Investor risk is further reduced through automated liquidation tools that either do not work or are not available in regulated markets. In regulated derivatives markets, all contracts state that the investor can lose much larger amounts of his capital, whereas in OTC markets with a contract there is a limitation of loss of capital.

4. It is possible to achieve profit in both upward and downward markets, without uptick or zero plus tick restrictions. The investor can sell anything without owning it.

5. It is allowed to use leverage from 5 to 30 times depending on the product (5 times in equities, 10 times in commodities, 30 times in currencies). Through leverage, the effect of buying or selling is magnified. Internationally known high priced shares such as AMAZON 2430$, BOOKING 1639$, GOOGLE 1432$, are now accessible with less capital, by 1/5.

6. Trades are executed at the minimum spreads of each product, without commission & custody fees. The costs in the regulated market, for buying and selling, range from 1.20%-2.50% plus brokerage fees, custody fees, minimum sign, etc., while on the CFD’s platform it is at most about 1/10th of that.

7. There is dividend receipt from the underlying products that distribute dividends, so the CFD investor also enjoys a dividend yield. This is not the case for derivatives within a regulated market, i.e. within an exchange.

8. High continuous trading liquidity.

9. Directly execute commands from a computer, mobile phone or any device connected to the internet (wired or wireless). Also: a) immediate settlement of transactions and debiting of the account with the results of transactions and b) immediate automatic archiving & storage of transactions after their results in the user’s account.

10. The platform has risk and performance management tools. (Stop loss/ take profit)

11. Free for investors live monitoring (no time lag) of stock market prices, seven days a week, 24 hours a day.

12. The platform is easy to use and technical support is provided.

13. Goodwill tax of 15% on the annual result (profit less losses), excluding other taxes on transactions.