Bucket shop mentality exposed by Australian brokerage as transparency becomes public domain

The taboo is no longer: Australian brokerage goes to the public domain on how b-book brokers make money and debates high leverage, likening warehousing to ‘casino’ businesses.

For some reason, a taboo subject among retail FX brokerages for many years has been the discussion in the public domain by industry participants, reporting entities and media outlets about the methods used by retail electronic trading companies to entice clients.

Most discussions on panels at conferences, in written material and between technology vendors, liquidity providers and brokers steer well clear of any mention of high leverage, trade warehousing and internalization and the realities of in-house risk management.

Why these matters are taboo is a complete mystery. In many other technology-driven industry sectors in which competition is as fierce as it is in the FX and CFD business, making important statements about malpractice is commonplace. Indeed, even the absolute pillorying of products by independent journalists and public forums has been a longstanding activity.

Back in the 1980s, consumer and special interest magazines on all subjects from consumer audio equipment to new cars began listing product information and specification pages which would alphabetically list all products from all companies in the industry, along with a short summary of the product, followed by a ‘pros’ and ‘cons’ statement. The ‘cons’ were often derogatory and very amusing.

This prevailed during the late 1980s and by the mid 1990s, television shows about new inventions, household goods and indeed cars became a platform for amusing anecdotes which in many cases highlighted the low points of each product.

British journalist Jeremy Clarkson has spent the past 35 years humorously piling contempt on products and companies which he believes are inept, embarrassing or fleecing their customers, yet nobody reaches for the telephone to call their lawyers.

The opposite is the case at the lower end of the retail FX and CFD business. Many companies which seek to bring inexperienced clients in via the backdoor, circumnavigating regulations and using offshore entities to provide glaringly outrageous trading conditions will immediately reach for the Cease and Desist letter template as soon as any utterance is made.

Speeches at conferences are tuned by compliance departments and vetted, nobody steps outside the box and very rarely is any misbehavior highlighted. Quite the opposite in fact. Just a few years ago, the largest names and loudest voices in many retail trading events and media were the semi-literate criminals running binary options brands – a whole concept which does not belong anywhere near genuine electronic trading. Some regulatory authorities, now hamstrung under MiFID II rules, even gave them financial services licenses!

This week, light is definitely visible at the end of the tunnel, as Australian electronic trading company Global Prime has begun to issue publicly available videos depicting the pitfalls of working with low end brokers, and what high leverage and b-book market making really represents.

Whilst FinanceFeeds takes an impartial view on this matter and can categorically confirm that we have absolutely no commercial relationship with Global Prime, it is a debate that is worthy of industry discussion.

For this reason, it is viewable here. Let’s hope that we, the good people of the FX industry, can work together to keep our standards high.

Read this next


SteelEye tries ChatGPT for market surveillance

This capability can be used as a starting point for initiating a surveillance investigation and to standardize workflow processes to boost the throughput and consistency of cases. It is also useful when analyzing communications in foreign languages, as the system returns the above insights in English regardless of the languages being used.

Industry News

SEC charges ex-Morgan Stanley advisor of NBA players after $13m fraud

Darryl Matthew Cohen was arrested this week and is facing three different federal counts of fraud, which could amount to 20 years in prison if convicted, besides the SEC complaint. 

Industry News

AWS FinTech Africa Accelerator launched, applications until April 27, 2023

Founders will be offered tech resources, expert guidance, and a global network of industry leaders, technologists, entrepreneurs, investors, associations, and partners, in order to build their fintech products. 

Industry News

Interactive Brokers pays unmatched interest up to USD 4.33% on cash balances over $10,000

For clients of Interactive Brokers, interest accrues daily, and payments are posted on a monthly basis. Interactive Brokers’ cash management is integrated into client broker accounts, making it simple to earn interest and borrow at the lowest rates without transferring cash.

Retail FX

FP Markets adds cTrader to roster of trading platforms that include MT4, MT5, Iress

“Our market share swings towards the more sophisticated segment of traders and we have been inundated with requests for an additional platform with more institutional-style characteristics. The addition of the cTrader trading platform offering allows our clients the choice to further shape their trading experience with us.”

Digital Assets

SEC mulls lawsuit against Coinbase’s staking and spot trading

Shares in Coinbase fell 15 percent after the US Securities and Exchange Commission threatened a potential enforcement action against the crypto exchange over certain products.

Digital Assets

Kraken halts ACH transactions amid banking crisis

San Francisco-based cryptocurrency exchange Kraken says it will no longer process Automated Clearing House (ACH) following the failure of its payments partner, Silvergate Bank.

Digital Assets

French influencers face two years in jail for promoting crypto products

France’s National Assembly’s Economics Committee voted in favor of a law that bans social media influencers from touting risky financial services, including cryptocurrencies.


Exberry’s Guy Melamed on paradigm shift with cloud-native exchanges at FIA Boca 2023

FinanceFeeds Editor-in-Chief Nikolai Isayev spoke with Guy Melamed about Exberry’s cloud-native exchange SaaS platform certified by AWS to bring about a paradigm shift in the industry at a time of cybersecurity concerns.