There is no question that their margin on cash deposits will...

There is no question that their margin on cash deposits will decline overall. It is way too simplistic to suggest that this means their business model is flawed though. The following are mitigating factors and actions the company can take:

- Total cash on the platform has increased significantly (up ~300%). This was only $75m this time last year. While margin has declined, this is offset by volume.
- Trading gross profit is significantly more than it was this time last year (more than double).
- With increased credit spreads, a significantly larger cash balance, and the uptake of thousands of new bank accounts, SWF could pressure ANZ to increase the current margin they receive from ANZ.
- With increased volumes, SWF can negotiate a better margin with suppliers (e.g. Openmarkets).
- If absolutely required, SWF could probably increase trade prices slightly (or perhaps $9.50 for each black trade of $X) and many people wouldn’t move. (Although I think this will be a last resort and would not be enacted in the short term).
- With 5+% of the market, they could offer IPOs to their members and earn a broker fee.
- They could offer other products to members.

Finally, they have >$4m in the bank and a very consistent business with a rapidly growing market share.