Saxo Bank, the Danish bank specialising in online trading, will this month become the latest financial institution to try to harness the power of social media in the pursuit of new clients.
In fully launching TradingFloor.com - dubbed a "Facebook for traders" - it is at least the third trading platform to argue that individual traders of equity and currency derivatives in the UK want to interact with others and share information. It is also at least the third to make a direct, if well-worn, comparison with other, more established social networks.
But it will be first to acknowledge that, by allowing traders to follow each other's thoughts and imitate each other's behaviour, it is providing a service far beyond simple order execution - requiring more risk management and regulatory scrutiny.
Social trading, as it is known, has grown rapidly in popularity in recent years, as online trading platforms have given their users the opportunity to communicate with each other.
eToro, which calls itself "your social investment network", launched in 2007 and has three million users. StockTwits, which streams financial information in the same 140-character format as Twitter, claims an audience of 40 million since it was set up in 2008. In the same year, CMC Markets tested a "trading social network" in Australia allowing traders to create an online profile giving details of preferred trades.
For private, rather than professional, traders, this need for sharing is natural, suggests Rune Bech, Saxo's chief digital and communications officer.
"The most common question we hear is: 'Why would anyone share information?'" he acknowledges, before citing two reasons.
First, being part of a network of traders turns something "so inherently solitary" into a "social event to be shared". Second, learning what others are doing can be instructive. "The answer probably ties in to the pride thing," he says, "the desire to measure yourself up against the community, to see yourself move upwards on the leaderboard, and to get feedback, praise from the community. But ultimately our users want to learn from other traders, and pull back the curtain on how they trade and think."
Saxo Bank's social trading service will allow users to interact with other traders, see the trades they make, and follow their overall trading performance. It already has 800 users signed up, and hopes to surpass 1m unique users per month by 2018.
However, it is automated "copy trading" - instantly putting a client's money into the same trades made by others - that has been getting the platforms excited, and the regulators concerned.
Last month, the UK's Financial Conduct Authority sent a letter to online trading platforms informing them that will treat automatic copy trading as discretionary investment management for authorisation purposes - rather than the simple execution of trades chosen by a client without any advice.
Similar shifts are occurring further afield. Last week, the Japanese Financial Services Agency took the step of registering Tradency, a provider of "mirror trading" technology, as an investment advisory business.
eToro, the leading provider of copy trading globally, is not authorised as a discretionary manager with the FCA or any other regulator. It is regulated by CySEC, the Cypriot regulator, and therefore allowed to operate in EU countries, such as the UK, under a "passporting" agreement. FxPro's SuperTrader, which allows clients to copy trades suggested by computer algorithms, is also passported in under a similar agreement.
Last month eToro said it was keen to comply with any necessary regulations.
Saxo - which is authorised as a financial adviser and portfolio manager by the Danish regulator - appears to have foreseen such problems, though.
It will not add an automatic copy trading function to its social trading service until the fourth quarter of the year, and it will have the kind of client suitability and risk profile checks used by discretionary managers built in.
"We welcome regulation on auto trading - we also see it as a form of discretionary portfolio management and we are introducing the suitability checks required," it said.
To use its copy trading service, clients must pass an initial suitability test and then, whenever they click to "copy" on another trader, they will be reminded of the risk involved - and be able to specify a maximum loss.
Whether the discretion of other traders - which eToro chief executive Yoni Assia likens to the "wisdom of crowds" - proves loss making or profitable remains open to debate.
Alex "Sandy" Pentland, a professor at the Massachusetts Institute of Technology, recently analysed 10 million trades by 1.6 million eToro users and concluded that those who copied the widest range of other traders made more money than those who copied infrequently or not at all.
However he also suggested copy traders could act as a contrarian indicator. "If you look at copy trading patterns and just see exaggerated individual trading patterns, then betting against this is a great trade," he said.
© The Financial Times Limited 2014. All rights reserved.
FT and Financial Times are trademarks of the Financial Times Ltd.
Not to be redistributed, copied or modified in any way.
Euro2day.gr is solely responsible for providing this translation and the Financial Times Limited does not accept any liability for the accuracy or quality of the translation