Another week, another (two) retail broker joins the...

Another week, another (two) retail broker joins the market.

Surely, with Dhatt and Gaywood underwater which has been a hugh drag in their fund performance in past half year, they would be receptive to a takeover offer from the likes of well capitalized participants mentioned below. As pointed out in the article, given the congestion in the market it would be a lot more prudent for these entrants to acquire vs burning capital on marketing. SelfWealth is the most obvious acquisition target IMO, beat up SP incl. bagholding shareregister, poor management, established userbase etc.

Street talk article in A F R yesterday - another reason why SP jumped yesterday:

Online retail trading arrivals stir hopes for local M&A
At least two online trading giants are looking to break into Australia, leaving some watchers wondering if the oft-predicted consolidation in retail brokerage could soon start playing out.

NASDAQ-listed $US6.3 billion ($8.7 billion) Futu Holdings has chalked in March to launch its retail trading platform moomoo down under

Moomoo already has 17 million odd users (Hong Kong, US and Singapore being its key markets), but more importantly a deep-pocketed parent. Just last year its parent Futu raised $US1.4 billion to put towards global expansion among other things.

A spokesperson for the company said while moomoo had done considerable R&D before dropping the pin on Australia (aka organic growth), it was well funded via Futu and would “consider a range of strategic growth options.“

Moomoo is not the only online broker headed to Australia, Webull Securities which has 7 million odd users is also understood to be recruiting for an Australian foray. Late last year, South African EasyEquities’s local business launched quietly, while Tiger Brokers (also 7 million users) arrived with a splash. And Street Talk hears there’s more international arrivals in the year ahead

The big question on everyone’s minds is, how hard would the new arrivals go with marketing to acquire new customers. And would the smaller local players be able to keep up?

At a quick glance, for Futu’s US$6.3 billion valuation, we have sub-$150 million ASX-listed counterparts. That’s a lot more firepower.

Crossing 100,000 users has been a milestone celebrated by new Australian trading platforms, while the international arrivals already have millions cornered.

To state the obvious, retail trading platforms could find life much more difficult soon and that would feed into M&A or well, at least more frequent capital raisings.