Retail Traders Struggle with Trading Fees: Regulator Aims for Simplification

<p>To improve
fee transparency for retail investors, the Autorité des Marchés Financiers
(AMF), France's financial market regulator, has published a guide for financial
professionals outlining standardized commission terminology. This initiative is
part of a broader effort to provide educational resources and tools that help
retail investors understand the costs associated with trading and financial
products.</p><p>Retail Traders Don't
Understand Fee Impact on Investment</p><p>A recent
survey by the <a href="https://www.financemagnates.com/tag/amf/" target="_blank" rel="follow">AMF </a>revealed that over half of French retail investors struggle
to assess the impact of fees on their investment returns. This lack of
understanding is concerning for the regulator, as fees can significantly affect
investment outcomes. Furthermore, a recent AMF investigation found that fee
information is often inconsistently presented across different asset classes, making
it difficult for investors to make informed decisions.</p><blockquote><p lang="en" dir="ltr">52% <a href="https://twitter.com/hashtag/retail?src=hash&amp;ref_src=twsrc%5Etfw">#retail</a> <a href="https://twitter.com/hashtag/traders?src=hash&amp;ref_src=twsrc%5Etfw">#traders</a> in <a href="https://twitter.com/hashtag/France?src=hash&amp;ref_src=twsrc%5Etfw">#France</a> do not understand how <a href="https://twitter.com/hashtag/trading?src=hash&amp;ref_src=twsrc%5Etfw">#trading</a> <a href="https://twitter.com/hashtag/fees?src=hash&amp;ref_src=twsrc%5Etfw">#fees</a> impact their <a href="https://twitter.com/hashtag/investments?src=hash&amp;ref_src=twsrc%5Etfw">#investments</a>, according to <a href="https://twitter.com/hashtag/AMF?src=hash&amp;ref_src=twsrc%5Etfw">#AMF</a> <a href="https://twitter.com/lautorite?ref_src=twsrc%5Etfw">@lautorite</a> <a href="https://t.co/pMlGBbBHhR">pic.twitter.com/pMlGBbBHhR</a></p>— Damian Chmiel (@ChmielDk) <a href="https://twitter.com/ChmielDk/status/1714945443728089104?ref_src=twsrc%5Etfw">October 19, 2023</a></blockquote><p>"Investor
protection is our top priority. Clear, detailed and accurate information on
fees is essential for investors to be able to compare and make informed
choices, particularly in a context of inflation," <a href="https://www.amf-france.org/en/news-publications/news-releases/amf-news-releases/amf-ensures-retail-investors-are-properly-informed-fees-financial-products#xts=607212&amp;xtor=RSS-3&amp;type=RSS">said</a>
the AMF Chairwoman, Marie-Anne Barbat-Layani. "We encourage professionals
to use this glossary, which represents a real step forward for retail
investors."</p><p>The AMF is
not just stopping at the guide but also expanding the retail investor section
on its website to include a new area focused on fees. This section will feature
a glossary, articles, infographics, and tools such as a stock market fee
simulator. It will also provide an overview of fees charged on various types of
funds and by investment service providers, updated annually.</p><p>In March,
the AMF collaborated with the Financial Sector Consultative Committee (FSCC) to
propose standardized fee terminology. The FSCC, which includes representatives
from both the retail investor community and financial professionals, supported
these proposals. The AMF is now inviting professionals to adopt this
standardized terminology in their future documents related to fees and costs.</p><p>Rising Number of French
Investors</p><p>France's
investment landscape is seeing a surge in individual participation, according
to data from the AMF. In 2022, <a href="https://www.financemagnates.com/forex/france-had-over-15-million-active-stock-market-investors-in-2022-amf/" target="_blank" rel="follow">over 1.5 million active investors were recorded
in the country's stock markets</a>, a slight decrease from the previous year but an
increase from 2020. Interestingly, the market welcomed nearly 195,000 new
investors last year, indicating a growing enthusiasm for investment among the
French population.</p><p>On
International Women's Day, the AMF released a report highlighting the changing
gender dynamics in retail investment. While men still make up the majority of
active retail investors, <a href="https://www.financemagnates.com/forex/growing-number-of-french-women-wants-to-trade-amf-study-shows/" target="_blank" rel="follow">women are increasingly entering the scene</a>, now
accounting for 30% of the investor pool. The report also found that younger men
tend to be more transactional, while women's participation increases with age.</p><p>The AMF has been vigilant in warning the public about <a href="https://www.financemagnates.com/forex/french-regulator-warns-against-fx-trading-robots/" target="_blank" rel="follow">unauthorized automated forex
trading services</a>. These rogue entities often target French overseas
territories, promising unrealistic returns and charging exorbitant fees for
trading robot licenses. The regulator's efforts aim to maintain a secure and
transparent investment environment.</p><p>A study by
Capital.com revealed that <a href="https://www.financemagnates.com/forex/time-and-diversification-boost-retail-traders-profits-by-60-reveals-capitalcom-study/" target="_blank" rel="follow">retail traders could benefit</a> from diversification and more
extended position periods. Specifically, those who diversified across multiple
asset classes saw profit in 60% of their trades, compared to a success
rate of 48% for those focusing on a single asset class. As the retail investment
sector in France continues to evolve, the AMF is committed to safeguarding and
educating investors.</p>

This article was written by Damian Chmiel at www.financemagnates.com.