Companies that resort to attacking competitors rather than succeeding on their own merits are fortunately very rare in the FX industry, and are usually insignificant. Today, AvaTrade makes an aggressive diatribe against CySec regulated brand and its provider. We examine why this is poor practice and should be frowned upon
Vulgarity in the form of making unfounded assumptions about competitors and then propagating them in order to attempt to onboard new customers is usually a practice resorted to by those with zero value proposition.
Not only is it unbecoming of a serious businessman, but also demonstrates more than a degree of desperation.
Fortunately, in the retail FX industry, bashing competitors is not very common despite its online nature and the plethora of almost identical MetaTrader 4 white labels in operation – over 1,230 according to our detailed research which was carried out via an automated system that we developed last year in order to gain accurate statistics on industry parameters.
Often this type of infantile behavior only exists among some one-man-bands that are unable to move their services forward, however today, a relatively widely recognized FX brokerage has resorted to such mantra in order to attempt to engage its affiliates and dissuade them from using smaller brokerages, notably those based in Cyprus.
AvaTrade’s European division today sent an email to its affiliate database, under the apparent pretense that it was intended to provide news and information for affiliates in that an ‘uncertain future’ awaits them.
The diatribe continued, and made derogatory comments about a very well known broker technology solutions provider, as well as a brand which operates under a CySec license.
The email encourages affiliates to switch to what it calls a ‘safe haven’, that ‘safe haven’ of course being AvaTrade itself.
AvaTrade originates from Israel, however this particular division of the company is its European operations which is also licensed by CySec, and has offices in various European Union member states, including Germany and the United Kingdom, the latter of which operates under the FCA.
Whilst it is not a breach of regulatory remit to use derogatory material in marketing campaigns, it perhaps should be on the basis that the over-reliance on affiliate marketing and the forceful tactics used in order to gain affiliates and their customers are frowned upon by many regulatory senior figures.
AvaTrade is a company which majors on affiliate marketing, alongside many of its Israeli compatriots. Its roots, along with peers such as easyMarkets and Markets.com, lie firmly in the lead conversion and affiliate marketing camp, and not the financial technology and institutional electronic trading sector which is where many of the large British and American retail FX firms have their roots.
The affiliate marketing remit of AvaTrade spans the entire spectrum of its business, including how it does business with commercial partners, not just retail customers. Ironically, the bashing was aimed at a very small brand.
The letter, which was sent out today, reads as follows:
Recently, customer complaints about a few CySec regulated broker have reached us. This time it concerns the broker StockSTP, a brand of Leverate Financial Services Limited. Customers should not be able to log in anymore, calls and mails are no longer be answered and the chat is offline. We cannot judge the truthfulness of the rumors from our side as well as confirm a connection with the new rules of CySec. Nevertheless, it makes us thoughtful that even renowned companies such as Leverate Financial Services must deal with such rumors.
Adding the rumors around other brokers with projected commission payments or that these brokers are for sale, then it seems to be a restless and uncertain future for all affiliates.
Maybe now it is the best time to avoid this problem and to consider to switch the business to the safe heaven. One of these safe havens is AvaTrade EU regulated, reputed and not affected by all the changes of CySec.
Please do not hesitate to contact me for further information.
Have a great and successful week
The mind boggles as to what ‘all the changes of CySec’ are, and how AvaTrade is a safe haven. There does not appear to be any such explanation.
This type of ‘black PR’ against other firms rarely succeeds, and demonstrates an absolute lack of scalability in those which propagate it. It is reminiscent of an example which occurred in February this year, just a short time after FXCM’s decimation at the hands of the US regulatory authorities took place.
OANDA’s at the time newly inaugurated CEO Vatsa Narasimha resorted to using FXCM’s situation as a PR exercise, a practice that FinanceFeeds frowns upon greatly.
Despite there having been absolutely no conclusive proof until this day that any of FXCM’s retail customers were adversely affected by the company’s alleged undisclosed relationship with market-maker EFFEX Capital which it used to allegedly trade against its customers whilst all the while promoting its services as a direct market access brokerage, OANDA Corporation’s CEO approached the retail trading world with:
“OANDA supports CFTC’s move to protect the interests of traders, the diatribe was preceded by a message from the public relations firm stating “By now, I am sure you have seen that the CFTC has levied a huge fine against FXCM for engaging in false and misleading solicitations forcing its withdrawal from the US market.”
FXCM did indeed have a market maker execute trades instead of send them to market, hence it lost its license and now there is absolutely nothing left of the company apart from its flourishing Chinese operations, however time has demonstrated that, as detailed by extensive research by FinanceFeeds, there is every possibility that FXCM may be able to prove in court that it had no relationship with EFFEX Capital in terms of commercial ownership, and that the NFA may well be subject to litigation for destroying FXCM’s business.
Thus, Mr Narasimha’s commentary in February was completely unresearched and an attempt to strike fear into the minds of customers, and send them running to OANDA.
Except that they didn’t. Instead, GAIN Capital onboarded FXCM’s client base for an absolute song, and is now going from strength to strength with aspirations of dominating the North American market on an almost monopolistic scale, whereas OANDA Corporation, despite being one of only two retail FX brokerages in the world’s most stable and well organized retail electronic trading market, is a fraction of the size, and continues to experience a revolving door situation with regards to senior executives and leadership.
This speaks volumes about that type of approach. Competitor-bashing of this nature demonstrates instability and is actually detrimental to consumer confidence, hence this methodology applied by AvaTrade should be equally regarded as infra dig.