Differing fortunes

Darren Sinden

There are lessons here for the trading and brokerage industries, the most obvious being that companies will need to innovate to survive, and that simply being a reseller of other companies’ liquidity and trading environment will no longer be good enough.

Lydia Solinski now Bank Liquidity Manager at 360 Trading Networks

Here at Finance Feeds, we are passionate about the intersection of finance and technology and the interplay between those two sectors, the boundaries between which are becoming less distinct.

The world of finance has a longstanding reputation for wealth creation for both business owners and entrepreneurs, though in recent years rising costs, reduced profit margins and increased competition have made that wealth much harder to accrue.

A report that was originally published and perhaps overlooked earlier in the year resurfaced this week helped put that trend into context.

The UBS PWC report, released under the title Riding The Storm provided an insight into how billionaires have fared during the market turbulence seen in 2020. This represents the seventh report in the series and covers a research universe of 2000 of the worlds richest people, spread across 43 markets throughout the Americas, EMEA and APAC, where 98% of the world billionaires can be found.

This year’s report was compiled after a period of research that ran until the end of July and as such, it captured the first half of 2020 including the market sell-off and subsequent sharp rebound.

The 40-page report is filled with interesting snapshots and information about the super-rich, but some of the most compelling data revolved around the differing fortunes (quite literally in many cases) between billionaire in different industries and sectors.

For example, the combined wealth of billionaires within the financial services industry has been estimated at $229.1 billion, whilst technology billionaires included in the survey had a combined wealth of $565.70 billion.

The growth rates for wealth also varied dramatically between the two sectors with tech billionaires enjoying growth of 41.1% compared to just 12.8% among the financial services peers.

2020 has been a year in which many financial service businesses have experienced dramatic growth in both client numbers and trading activity, although that has not filtered through into the net worth of business owners in the same way that it has in the technology sector.

Technology stocks, of course, have had an extraordinary performance in 2020 with Nasdaq 100 up by 42.80% year to date, in contrast, the S&P 50o Financials sector is down 7.20% over the same period.

The UBS PWC report highlighted one of the main causes of these disparities, saying that “Scientists, computer programmers and engineers are revolutionizing industries at a pace never seen before. Their sphere of activity is spreading from the tech and healthcare sectors to disrupt many parts of the economy. As they apply emerging technologies to drive change, some of them are becoming billionaires.”

It seems that even the richest among us are not immune to disruption.

There are lessons here for the trading and brokerage industries, the most obvious being that companies will need to innovate to survive, and that simply being a reseller of other companies’ liquidity and trading environment will no longer be good enough.

It is clear that we will see a further polarization between those who are prepared to innovate and create their own technology and solutions, or perhaps partner with, or buy up fintech and those businesses that remain rooted in the past.

The future does not look very bright for those who choose to remain in the latter group.

Read this next

Digital Assets

LMAX Digital onboards Bryan Christian and Cassandra Cox to lead sales

Institutional cryptocurrency exchange LMAX Digital continues to undergo a series of changes in its top ranks as it continues to build its presence globally. Two industry veterans, Bryan Christian and Cassandra Cox, have joined the group as its newest sales directors in Europe and USA.

Digital Assets

Cake DeFi introduces Ethereum Staking with 5% returns

Cake DeFi, a Singapore-based DeFi platform, is launching its Ethereum (ETH) staking service for retail and institutional customers.

Retail FX

FX trading rebounds 405pct at Saxo Bank in September

In a volatile market driven by Russia-Ukraine headlines, FX trading volumes through Saxo Bank have rebounded strongly in September to the highest level in three months.

Retail FX

CMC Markets’ stock climbs as H1 revenue to climb +20%

CMC Markets PLC (LSE:CMCX) shares spiked 5.6 percent to 235p in Thursday’s trading after the firm’s trading update for the first half of its fiscal year 2023 revealed results at the high end of company projections.

Retail FX

Interactive Brokers doubles client accounts to 2 million in 24 months

Electronic brokerage firm Interactive Brokers LLC (NASDAQ:IBKR) said its trading volumes took a slight step back in September, an indication that investor confidence is still fairly mixed over the past few months.

Digital Assets

DeFiChain tokenizes Walmart, Unilever, US Oil and Gas Funds

Bitcoin-based DeFi platform DeFiChain is opening up the opportunity for its users to trade crypto versions of Walmart, Unilever, US Oil Fund, and US Gas Fund.

Industry News

The B2Broker B2Core REST API Is Now Live

B2Broker has announced the release of its new REST API, which lets customers use B2Broker’s solutions and services for business purposes.

Executive Moves

CME Group taps Paul Woolman to lead Equity Index, Giovanni Vicioso to lead Crypto

“Our equity and cryptocurrency businesses have experienced tremendous growth in recent years, underpinned by strong customer adoption and continued innovation.”

Technology

Sumsub launches document-free KYC for users in India, Brazil, Nigeria and Indonesia

Sumsub has launched one click-KYC for users in India, Brazil, Nigeria and Indonesia in a move that allows businesses to instantly onboard over 2 billion users without requesting their ID documents.

<