The trading volumes with CFDs in Germany have reached a new historic high in 2021. The level of activity also marks a new record in the first quarter of 2022. A market analysis based on a survey of around 2,000 investors suggests the background to the boom, but also shows where investors see potential for improvement, particularly in regulatory terms.

Frankfurt, May 30, 2022 - CFDs (short for Contracts for Difference) rose again in the favor of German investors in 2021, further cementing their reputation as a relevant instrument on the capital market. Trading in CFDs reached a new record: the volume traded in contracts for difference in Germany was 2,294 billion euros. This is an increase of 10 percent compared to the previous year (2.09 trillion euros) and also the highest value since CFIN - Research Center for Financial Services has been collecting the data. "Last year's record trading volumes are impressive proof that CFDs are an important player in the capital market. The high demand, moreover, is not solely driven by individual situations such as the CoronaCrash in spring 2020 driven. Interest in this attractive product is constantly high - also because it has special qualities as a hedging instrument," explains Rafael Neustadt, Chairman of the Board of the Contracts for Difference Verband e.V.. He adds, "In all quarters of 2021, investors have relied on the flexibility of CFDs in order to be able to react efficiently to the turbulent phases on the stock exchange - whether to position themselves accordingly offensively, for example with leverage, or to hedge against imponderables."

The boom in CFDs is definitely sustainable: even in the first quarter of 2022, there is another peak in trading volumes, with 636.9 billion. Rafael Neustadt also attributes this to the Ukraine war: "Market volatility is enormously high against the backdrop of the geopolitical situation; in such an environment, investors resort to CFDs particularly often." In 2021, trading volumes were above 540 billion euros in every quarter; in the fourth quarter, the strongest of the year, volumes (597 billion euros) even scratched the 600 billion euro mark. Customers most frequently traded CFD contracts, each of whose underlying is a stock index. Thus 87.5 per cent of the traded volume went on the account of DAX, Dow Jones and Co. with 50,3 per cent of the commercial turnovers the DAX was by far the most popular basic value under the indices,
whereby it lost slightly in Zuspruch (previous year 57,2 per cent). On the other hand, the Nasdaq increased significantly, from 6.1 to 12.1 percent.

The number of transactions in 2021, however, fell significantly compared with the previous year, by around 22 percent to around 72 million orders. The reason for this is the extreme volatility in the corona crash year 2020, which had encouraged investors in the financial market to be more active than average. In the first two quarters of 2020 in particular, the range of fluctuation was extremely high. However, transactions in 2021 were still at levels similar to those seen in the strongest years of the pre-Covid era. The fact that, despite this decline compared with 2020, a new record was nevertheless achieved in terms of total volume is due to the significant increase in the average volume per individual transaction by around 40 percent to just under EUR 32,000. Rafael Neustadt attributes this to the market environment: "In the first Corona year 2020, investors were very active overall, but rather hesitant about the amount of the individual trade. This uncertainty has decreased in 2021, moreover, the investors now had more investment capital available - hence the increase in the average transaction volume," he says.

The popularity of CFDs is also reflected in the number of CFD accounts in Germany: compared to the previous year, it increased by 12 percent to around 292,000 in 2021. However, despite the extremely positive figures, the CFD Association also sees some potential for optimization, particularly in the general conditions of the market. For example, the latest edition of the association's annual investor survey reveals points of criticism from investors, particularly with regard to legal requirements. Of the roughly 2,000 investors surveyed by the CFIN Research Center for Financial Services at the end of 2020, almost three-quarters said they were critical of the political and tax measures in Germany for building up private pension provision. 71 percent would even probably or very probably stop CFD trading if the framework conditions were to tighten further.

"One sees on the basis these numbers that the policy gambles here confidence and acts past at the interest of the citizens", explains Rafael Neustadt. After all, 73 percent of respondents agree that CFDs contribute to an improvement of the German investment culture. "Politicians are putting obstacles in the way of CFDs as a financial instrument, and thus in the way of investors, even though the latter explicitly appreciate the benefits of contracts for difference. Against this background, we believe that the harmful restriction on tax loss offsetting should be reversed as quickly as possible," adds Rafael Neustadt. The surprisingly strong first quarter of 2022 caused by the war in Ukraine belies the legitimate concerns of providers that many investors may withdraw from CFD trading due to the tax issue, according to the association's CEO. The CFD Association sees its demand for the additional investor category of the semi-professional trader as a supplement to the existing categories "Professional" and "Private" confirmed by the results of the survey. 77 percent of respondents show themselves ready for registration as a semi-professional trader, 85 percent would agree to an online suitability test.

By introducing the semi-professional trader, the association sees the possibility of granting suitable investors greater trading freedoms, for example by easing leverage restrictions, provided that these investors have advanced product knowledge and many years of trading experience. "Our foremost concern is the protection of the private investor, on the other hand we also want to open up to self-responsible traders all the possibilities that the financial instrument CFD offers him - the introduction of the category of the semi-professional investor is in our eyes the only sensible solution," says association chairman Rafael Neustadt. The market study also provides important insights into the experiences and preferences of CFD investors. For example, high levels of experience are evident among both professional investors - 96 percent have been trading for more than two years - and
private investors (66 percent). Eighty-five percent of respondents deal with their own investments on a daily basis, and nearly half say they have made more than 100 trades in the past year.

What unites most traders: they particularly appreciate the comprehensibility of CFDs, but also the supply of real-time prices and the possibility of being able to bet on both rising and falling prices. Another noteworthy aspect is the topic of risk. Although a total of 92 percent of the respondents consider their trading style to be at least offensive, CFDs are not only used for short-term speculation, but also to hedge portfolios and deposits. It is also striking that the use of active risk management has jumped from 70 to 88 percent compared to 2020, for which different order types are primarily used for hedging. "The analysis of the survey shows how differently investors use CFDs - and how CFDs thus contribute to a better investment culture," explains Rafael Neustadt.

About the study and the CFIN data:
Since 2015, the CFIN Research Center for Financial Services has been providing important insights into the market for contracts for difference in Germany every year with the CFD Market Study. Thus, based
on a representative survey, the study provides insights into, among other things, the risk affinity and motivation of CFD investors. With the quarterly and full-year figures, the institute also
regularly presents the development of the CFD industry. The survey relates to the German market and to customers based in Germany. To calculate the overall market,
data was collected from the participating companies Comdirect, consorsbank (BNPP), FXFlat, flatex, GBE brokers, IG Europe, Onvista Bank, S Broker, Vitrade and WH Selfinvest.