Here in Shanghai, Tim Brankin explains a world first in which the MetaTrader 4 platform is now connected to CME to enable retail customers to trade listed derivatives on CME and OTC FX on the same system via the same brokerage
Just one month ago, the establishment that dominates the retail OTC trading industry was dealt a somewhat unpleasant blow by the Financial Conduct Authority (FCA) in Britain in the form of proposed new rulings on how CFD products can be offered on an over the counter (OTC) basis.
Among the proposals set forth by the FCA were a series of criteria, including leverage restrictions, which resulted in a thought process among industry leaders that the large executing venues may well be lobbying the regulatory authorities in order to attempt to move the OTC industry onto exchanges.
As is often the case, many innovations must once again take place in order to ensure that the retail trading industry is future proofed enough to be able to continue to lead the way ahead should any attempt at placing it on exchange be successful.
Today, at the annual FX conference in Shanghai hosted by YOCA in conjunction with FinanceFeeds, Tim Brankin met with FinanceFeeds, and a comprehensive discussion about Direct FX’s multi-product trading environment was conducted.
Mr. Brankin who is Business Development Director at Direct FX explained the background of the company in order to demonstrate the historical path that the company trod which led it toward the mainland Chinese market and the development of a multi-product trading environment. “We have been in Australia since 2012, after buying the ASIC license from ODL Securities before it was acquired by FXCM as ODL Securities was focusing its UK spread betting and CFD entities and no longer needed the ASIC license” he said.
“In terms of origin, however, Direct FX can trace its establishment back to 2006 in the United States, when it was a Forex Dealer Member of the National Futures Association (NFA).”
Tim Brankin joined Direct FX in February 2016 from TradeToolsFX, with a wealth of industry experience at executive level covering infrastructure and trading technology as well as brokerage pinpointing his career.
“Although FX in the Chinese market has been around for a few years, we still think that we are in the early stages of this industry for this market” enthused Mr. Brankin.
“The Chinese clients and IBs are now highly sophisticated and educated about the structure of the FX industry, and the introducing brokers themselves are extremely astute.”
“Direct FX focuses most of its activity in China on portfolio management companies which have business to business relationships with us, as an IB is often a portfolio manager these days, with a large client book and tens of millions of dollars in assets under management, rather than simply a referring agent” – Tim Brankin, Business Development Director, Direct FX
“The age of the wealth management business in China is now well underway and clients like the Australian aspect of our business, as it is widely respected as a high quality jurisdiction for FX brokerages” said Mr. Brankin
“Direct FX is a traditional and diversified FX broker with many retail clients, and our main focus is to work with more institutional partners that require access to top tier liquidity from overseas and well recognized prime brokerages, thus we provide the clearing and STP execution that Chinese clients and portfolio managers demand from us as the broker” he said.
Warehouse model is well and truly history
In terms of how the requirements from Chinese entities are concerned these days, Mr. Brankin concurs with FinanceFeeds that the level of sophistication and the large investment amounts in China are completely disproportionate to that of the rest of the world.
“Institutional clients require special banking relationships, and in that respect we can offer segregated individual customer accounts with our banking partner in Australia so therefore it gives the IBs and portfolio managers peace of mind knowing that they will not be pooling the several million dollars that they transfer on a regular basis into a large, single client assets account and are instead gaining their own separate bank account with a well recognized Australian bank” explained Mr. Brankin.
“Chinese investors are extremely analytical” said Mr. Brankin. “The institional partners here in China will often test not only the trading environment once an initial deposit has been made, but will also test the withdrawal and deposit process so that they can see if we are able to expedite any transactions and that there are no anomalies. They want to check whether their money si safe and accessible.”
“We had a meeting today in the Bund in Shanghai with a portfolio manager that has already deposited $3 million. That particular portfolio manager then conducted tests by making small trades to test the system and made a few small withdrawals. They will now deposit $25 million after the Chinese new year” – Tim Brankin, Business Development Director, Direct FX
Connecting MT4 to exchanges for futures and equities, whilst remaining OTC for FX on same platform
Mr. Brankin then began to explain the company’s multi-product solution. “Direct FX is the first broker to offer a full multi-asset MetaTrader 4 platform, because of integrating futures and US equities on MT4 which are exchange traded on CME” he said.
“We can also connect to regional exchanges around the world. We have a partnership with CQG which is a company that built several connections and the ‘plumbing’ to all the exchanges around the world. We have a partnership with oneZero as we needed to be able to develop bridging technology to take what CQG had built and integrate that for exchange trading on MT4 whilst allowing FX to be OTC” – Tim Brankin, Business Development Director, Direct FX
Mr. Brankin is a specialist with regard to developing integrated systems that allow exchange traded futures to be accessible to retail traders via MetaTrader 4 whilst allowing the FX instruments to be traded on an OTC basis from the same platform, as he spent three years as Managing Director at TradeToolsFX in Chicago, which, among other solutions, developed a fully integrated solution to connect the MetaTrader 4 platform to Chicago based binary options venue Cantor Exchange.
Mr. Brankin has a vast and extensive career background in the institutional and listed derivatives sector, having spent 7 years at TD Ameritrade and a significant period at E*TRADE before joining Velocity4X in January 2006.
Mr. Brankin understands that the general direction this year will be an evolution of business from that of standard OTC FX brokers.
Having a multi-product system helps attract institutional business in China because Chinese investors want access to other investments because the government restricts where they put their money which is generally limited to chinese stocks and property.
Direct FX has entered into a partnership with DriveWealth which has a relationship with ICBC which is now a NYSE member firm. Chinese investors can that way invest in US firms like Amazon, Apple, Google, alongside Chinese stocks like Baidu and Alibaba.
“My main focus is working with the institutional clients here in China to set up the connectivity and access to the US futures and equity markets for their money managers and their clients, therefore now our chinese partners and clients have a truly diversified portfolio for the first time by being able to invest in US commodities, equities alongside the currency markets, so our aim is to become a comprehensive financial services provider similar to the companies I worked at in the past like TD Ameritrade and E*TRADE which have turned into global powerhouses for self-directed retail futures investors” concluded Mr. Brankin.
Photograph: Tim Brankin of Direct FX receives the award for Best Brokerage in China at today’s FX industry conference in Shanghai. Copyright FinanceFeeds#CME, #DirectFX, #mt4, #Mutli-Asset Trading, #tim brankin