What you need to know about the AvaTrade IPO

An office of traders with multiple trading screens
Rebecca Cattlin
By :  ,  Former Senior Financial Writer

What is AvaTrade?

AvaTrade is an online trading platform that provides access to financial markets – including shares, forex and indices – via CFDs. It was founded in 2006 by Emanuel Kronitz and Negev Nosatzki, in the Republic of Ireland.

The company now has four offices across the globe, located in Japan, Australia, Ireland and the British Virgin Islands. It is also a member of the Ava Group, which is headquartered in Australia.

AvaTrade’s client base grew to more than 300,000 traders across 150 countries – including the US, Europe, Africa and China – in 2020. It reports some two million trades monthly, representing around £60 billion in volume.

AvaTrade is not regulated by the Financial Conduct Authority (FCA), which may be concerning to UK and EU-based traders. But it is regulated by several different bodies, including the Central Bank of Ireland, the Australian Securities and Investments Commission, Japan’s Financial Services Agency and the Financial Sector Conduct Authority in South Africa.

How does AvaTrade make money?

AvaTrade makes money from the spreads and commissions it charges on each trade and any additional fees such as overnight financing and inactivity.

AvaTrade uses a dealing desk or market maker model of execution on its client accounts – where it uses internal liquidity to offset positions, and then hedges any additional exposure it may have.

Is AvaTrade profitable?

As AvaTrade is a private firm, a lot of its balance sheet remains unknown. What we do know is that AvaTrade has experienced a strong performance in 2020 thanks to the increase in market activity brought on by coronavirus volatility. It now has an estimated revenue of $76 million.

What is AvaTrade’s business model?

AvaTrade states that its business model is based on ‘commitment to client success and satisfaction’. This strategy has involved the creation of various add-ons to its basic package that allows traders to boost their experience – for a price.

For example, in 2020, AvaTrade introduced a new application called AvaProtect, which allows clients to protect trades against adverse market movements for a cost paid upfront. Essentially, the company would reimburse a trade for up to a certain amount of losses during a specific period for a fee. Notably, AvaTrade does not offer guaranteed stop-loss orders, which prevent market gapping entirely.

AvaTrade has also introduced ‘AvaSocial’ an app where clients can learn from expert traders and copy their trades.

Who are AvaTrade’s competitors?

AvaTrade’s competitors are numerous, as there are a lot of big names in the online brokerage space, including City Index and Forex.com.

With the introduction of its social trading app, AvaTrade also now competes with similar providers such as the controversial app Robinhood or eToro.

Who are the directors of AvaTrade?

  • Dáire Ferguson, CEO AvaTrade
  • Sari Hemmendinger, CFO
  • Turlough McIntyre, VP Risk Management
  • Ian Webb, VP Compliance
  • Peadar O’Shea, Non-Executive Director

When is the AvaTrade IPO?

AvaTrade has reportedly settled on an IPO on the London Stock Exchange in the second half of 2021. Reports suggest the company will list on the AIM sub-market with the help of JP Morgan and Jefferies.

Although no date has been set, it seems AvaTrade’s IPO could take place within just a few months as they seek to take advantage of the rush of IPOs in London.

Find out more about potential upcoming IPOs in 2021.

How much is AvaTrade worth?

AvaTrade is estimated to be valued between £500-£700 million following its IPO. It has no previous public funding rounds that can give any further indication of its value.

How to trade AvaTrade shares

When AvaTrade lists, you’ll be able to trade its shares in the same way you would any other publicly-traded company on the stock market.

In the meantime, you can trade stocks with City Index using spread bets or CFDs, with spreads from 0.1%. Follow these steps to start trading:

  1. Open a City Index account, or log in if you’re already a customer
  2. Search for the company you want to trade in our award-winning platform
  3. Choose your position and size, and your stop and limit levels
  4. Place the trade

Related tags: IPO Insights Stocks

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