Product innovation in futures remains in its infancy, and there are countless incumbent and start-up exchanges laser-focused on this evolving community, according to Marty Franchi, CEO of NinjaTrader.
“What’s interesting is that as products become smaller, more familiar, and more accessible, they attract a new audience graduating from a mobile-first equities experience, as well as seasoned professionals and institutional participants,” he told Traders Magazine.
He said that NinjaTrader has partnered with CME on their micro and event contract suite of products, and partnered with Coinbase on their crypto derivatives products.
“This is just the beginning. When we think a few years into the future, the trend of small, accessible, lower-cost products will continue,” he sad, adding that there will be products that do not exist today.
Franchi noted that trends including amplified financial literacy, access to capital markets information on mobile phones, the rise of retail trading, and the rise of self-directed investing across FinTech platforms in equities, options, and crypto have led to a “groundswell of interest” in this asset class.
He believes there are several benefits of futures trading such as the ability to seamlessly short any market, access to highly liquid markets, the ability to trade with leverage inherent in the products, longer trading hours and market access, and capital gains treatment of profits.
“Additionally, on-exchange futures ensure you and your broker are aligned, unlike some OTC markets where you are essentially trading with/against your broker,” Franchi said.
According to Franchi, NinjaTrader has been on a mission to make futures markets more accessible to the active retail trading community for many years.
“We believe that today the vast majority of retail investors are unfamiliar with futures, but soon, this asset class will be understood, embraced, and in considerably more portfolios,” he commented.
The Commodity Futures Trading Commission estimates that retail trading volume in futures contracts on US exchange now averages about 50% higher than during the pre-pandemic period.
According to Franchi, NinjaTrader has seen a huge spike in millennials and younger people getting into futures, as the company observed the average age of their users shifted from 48 to 38 years old in the last five years.
Franchi said that many years ago, FCMs and technology providers created opportunities for retail traders to move away from the trading floor to online brokerages which made futures trading more accessible.
However, the “new to futures” investor was initially ignored due to lackluster, archaic, and fragmented experiences, he said.
“Many walked away as they felt unsupported and unfit to trade in this asset class compared to others that had already become familiar and mainstream,” he said.
He added that NinjaTrader’s advocacy for this community of “new traders” and investment in modern experiences helped raise awareness to the asset class and have ushered in a new, younger audience that is learning to trade futures on our platform.
“It’s great to be the first to serve an underserved community, and it’s flattering that our success has attracted global attention from other non-futures platforms,” he said.
Educating and serving an active futures trader is quite different from providing mobile-first investment access to fractional shares in the equities markets, Franchi said.
“That said, we believe that with more folks advocating for retail futures participation, collectively we’ll be able to continue innovating, partnering with exchanges to develop products for retail traders, and ensuring a louder collective voice when advocating for this community in Washington,” he said.
“As futures are introduced on other platforms, it will continue to shine a spotlight on the benefits of this asset class, which will benefit all stakeholders,” he added.
