(Podcast #3) CFD – Cash for Dealers?

30 May 2018
Juan Colón

In this podcast episode we’ll explain how today’s retail trading industry works, and how Darwinex stands apart from the prevailing conflicted Cash for Dealers model. Hosted by Nick “The Moose” Batsford.

Why is the Cash for Dealers model still prevalent?

Every trader needs a broker. Surely if this was so obvious everyone would know it? Why is the Cash for Dealers model still prevalent? Why isn’t this common knowledge? We’ll talk about:

The “sausage factory”

  • 1200 GBP to get first trade
  • 3000 GBP per customer

The broker-dealer model

  • Dealer is default mode and it’s NOT necessarily wrong.
  • Broker in high risk mode. This IS the problem.
  • Conflict of interest in educating the lose peanuts crowd.
  • Conflict of interest in preserving shareholder capital over customer intellectual property.

The Darwinex model is a brokerage only model in which all flow is brokered away onto independent counterparties. We provide traders with execution information disclosing how quickly trades got filled and who’s on the other side of it.

One of the 4 ways we fast track traders is by providing execution by being firmly on customers side. We trade with customers, not against them.

However, the dealer model is more “efficient” in monetizing customer flow making more from average customers. This is why broker-dealers can pay more for advertising. This is also why no one hears this podcast, so, if you like it -> share it!

Listen to the episode

Next episode

How we legally overcome the peanut problem introducing the DARWIN asset class.