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eToro: Bringing Social Trading to China

Volume 3, 2017

Jasper Lee, Managing Director of eToro China, explains how his company is bringing the fairly new concept of social trading in stocks, foreign exchange and commodities to China and their plans for global growth. Former China General Manager at retail foreign exchange broker FXCM, Jasper has over 10 years of experience in the finance industry. Read on for excerpts from his exclusive interview with TheLINK. 

For those of us who haven’t heard of eToro, what does the company do?    

eToro is the world’s leading Social Trading Network.  We provide global trading products and copy trading. The company was founded in 2007 when we launched our first web-based trading platform. In 2010, we released the eToro OpenBook social investment platform, along with its Copy-Trading feature. The eToro OpenBook enables investors to view, follow and automatically copy the network’s top trader. And we keep inventing new products, for example we launched our Copyfund™ at the Web submit in Lisbon last December.

What is social trading?

Social trading is the utilisation of user-generated content, and crowd-wisdom, for the act of online trading. eToro provides our users with a variety of community-based tools in order to give them the information needed for making smarter investment and trading decisions. For example, users can see other users’ portfolios, read their news feeds, and look at their overall performance, to gain a better understanding of trading strategy. “Social trading” or “social investing” is the most recent evolution of online trading, and more of its potential is being realised every day. By adding social elements to online trading, we have created a unique social trading platform, which gives our clients a variety of ways to benefit from other people’s knowledge, and share their own. With over 6 million men and women from around the world choosing eToro for managing their online portfolio, the cumulative amount of knowledge and experience on the platform is overwhelming.

Social trading has been proven to produce better results than traditional trading. We have a Popular Investor Programme that gathers wisdom from the crowd. eToro’s business model is based on its clients’ financial success; so when they win, we win. That’s why we encourage our top traders to share their knowledge and reward them when they gain a following. With monthly payments, a spread rebate of up to 100%, and a percentage of their Assets Under Management (AUM), our Popular Investors earn real money for being successful traders, and allowing others to gain from their wisdom, experience and success.

We have a unique built-in system to aggregate clients’ trades and execute them at the same price as that of the Popular Investors. We also create a risk score to rank traders, so that clients can pick the trader that matches their own appetite for risk.

What is copy trading?

The CopyTrader™ feature allows traders to automate their trading by attaching some of their funds to another investor’s portfolio, and copying every move that investor makes in real time. We added this product after we realised that some traders lack the time or experience to use traditional methods of online trading. Therefore, we decided to utilise our platform’s social element by allowing traders to copy one another. Since we believe in full transparency, each user’s portfolio, track record, Risk Score, and success/fail ratio are available for all to see. Hence, our clients have all the information they need in order to choose the right trader to copy. The main idea of copy trading is that, with eToro, you no longer need to spend a massive amount of time analysing the market and you can put your trust in people who have done well. All you need to do is look into their portfolio and pick the one you would like to copy.

Last year we advanced to another level – CopyFunds. CopyFunds™ groups successful eToro investors together, and constantly makes adjustments to optimise the funds. However, unlike indices or ETFs (Exchange Traded Funds), CopyFunds™ is based on the wisdom of a select few investors, who are constantly active, and have shown impressive results in the past. Just like any other fund, the fact that it is composed of several elements adds more stability and reduces its risk as a financial instrument. An innovative financial instrument invented by eToro, CopyFunds™ is a brand new way to invest online. Each fund, which is traded just like any other asset on the eToro platform, is managed by a sophisticated optimisation algorithm.

How far along are you in accomplishing your goal of building a truly scalable “global market place for money management”?

We have more than 6 million users across 140 countries. So I would say we have been doing quite well in meeting this goal. We are constantly seeking strategic partners from different countries in order to bring eToro to the local market. Soon we will add stock from Hong Kong as well as Australia. With that, we will have over 1,000  asset classes to trade, catering to people all over the world.

We started our operation in China a year ago and the business is growing fast.Today China makes up around 10% of our users. We feel the urge to educate investors in China about risk as they tend to seek high-risk investments without understanding the true risk behind these investments. I truly believe our partnership with CEIBS will help us achieve this goal. We are looking for partnerships in China and worldwide. With CEIBS we gain exposure to elites all over the world.