FF Podcast Ep.#27: New Direction’s Opal Yang on how Forex works in China

Rick Steves

Opal Yang highlights the critical role of personalized relationships in the Chinese-speaking FX and CFD space and addresses the unique regulatory challenges in China, providing valuable insights into the Asian financial landscape.

Opal J.Y. Yang FF podcasts 1000х750

FinanceFeeds Podcast Episode 27, featuring Opal Yang, the Founder and CEO of New Direction Solutions, is now available. Hosted by Nikolai Isayev, Editor-in-Chief of FinanceFeeds, this episode delves into Yang’s expertise in the FX and CFD industry, particularly in the Asian market.

Opal Yang runs New Direction Solution, a London-based consultancy offering services in broker licensing, mergers and acquisitions, FinTech startup consultation, and project management.

Listen on your favorite streaming audio portal or our YouTube channel.

They also partner with brokers and asset managers as an introducing broker, connecting retail and high-net-worth clients to trustworthy entities and assisting in dispute resolution and complaints, especially in the Chinese-speaking markets.

“Forex trading in China is technically illegal”

Opal Yang highlighted the importance of personalized relationships in the Chinese market, where clients often rely on introductions and dedicated account managers rather than online advertisements. The approach varies across regions, with money managers being popular in China, while Taiwan and Hong Kong focus more on trading education and independent research.

The episode also touches on prop trading’s popularity in Asia. While it’s a significant trend in English-speaking countries, it’s less pronounced in Chinese-speaking markets, though the interest is growing, especially among younger and female traders.

Listen on your favorite streaming audio portal or our YouTube channel.

Yang discussed the complexities of operating brokerage businesses in China, where Forex trading is technically illegal, yet remains a prevalent topic in financial forums and media.

Many brokers circumvent this by establishing separate companies for customer service or marketing and working under service contracts. She also noted a trend of setting up offices in Dubai to serve the Chinese market, highlighting Dubai’s growing importance as a business hub for various international communities.

The role of IBs and Money Managers in China, Taiwan, and HK

In her insightful discussion on the FF Podcast, Opal Yang also shed light on the pivotal roles of Introducing Brokers (IBs) and money managers in the financial markets of China, Taiwan, and Hong Kong, as well as the regulatory nuances influencing trading approaches in these regions.

In China, Yang highlighted the paramount importance of relationships and personalized services in trading. Here, money managers hold considerable sway, often guiding clients in broker selection, a decision that can sometimes overshadow factors like broker licenses or spreads. This underscores the unique market dynamics where personal trust and professional networks play a crucial role.

Listen on your favorite streaming audio portal or our YouTube channel.

Moving to Taiwan, Yang points out a significant regulatory-driven shift. With the outlawing of forex trading on behalf of clients without a local asset management license, including the use of Expert Advisors (EAs), the market has pivoted towards trading education. This change has led IBs to focus more on guiding traders about fund safety and the selection of brokers, marking a notable transition from the previous reliance on EAs.

In the context of Hong Kong, the approach is more varied. While education remains a key component, the presence of independent traders is pronounced. These traders prioritize aspects such as fund safety, adherence to broker licenses, and favorable trading conditions like low spreads and high leverage.

Opal Yang further explained the evolution of trading services for Chinese speakers worldwide, with a notable shift from Hong Kong and Singapore to Dubai due to regulatory changes.

Prop trading in Chinese-speaking markets

Opal Yang also provided an in-depth analysis of the current state and potential of proprietary (prop) trading in the Asian markets, with a particular focus on the Chinese-speaking sector and its contrast with other Asian regions. Yang acknowledges the growing interest in prop trading in Asia, but she points out a significant difference in its popularity and acceptance between Chinese-speaking markets and other regions like Southeast Asia.

In the Chinese market, prop trading is just starting to gain traction and enter conversations among traders. This contrasts with the broader Asian context, particularly in Southeast Asia, where prop trading has already established a strong foothold.

She attributes this disparity to different target clientele and market dynamics. In the Chinese market, traditional forex brokers cater to a broad audience, including those interested in passive investment strategies like using Expert Advisors (EAs) or money managers. Prop trading, in contrast, appeals to a more dedicated, ambitious segment of traders who are willing to invest time and effort in their trading education and skills. This distinction creates a natural filter, narrowing the prop trading market to a more select group of traders.

Listen on your favorite streaming audio portal or our YouTube channel.

Furthermore, Yang highlighted the role of IBs in promoting prop trading. In traditional forex brokerage, IBs are highly motivated due to the commission structures. However, in prop trading, the commission earned by IBs is comparatively lower, which might reduce their incentive to promote prop trading actively. Despite these challenges, Yang sees potential for growth in prop trading within the Chinese market. She notes that trader funding companies can tap into previously unreachable segments by lowering entry barriers and attracting young, dedicated, and skilled traders, including an increasing number of female traders.

Women may be more inclined towards prop trading

Drawing from her personal journey as an Asian professional in the UK’s financial sector, Yang emphasized the importance of finding a niche, being open to taking risks, and speaking up, especially for women in the industry.

Listen on your favorite streaming audio portal or our YouTube channel.

She encouraged women to be more assertive in their careers, whether it’s advocating for a pay rise or venturing into starting their businesses. She highlighted the importance of taking risks and stepping out of her comfort zone to achieve professional growth and success.

Yang also suggested that while traditionally most traders have been male, the landscape is changing, with an increasing number of female traders showing interest in areas like prop trading. She attributed this shift to the psychological and risk-averse nature of female traders, who, when equipped with the right skills, are more inclined towards using funded money for trading. This cautious yet competent approach is leading more women to explore opportunities in the financial markets, challenging the status quo.

For more insights and detailed discussions on the FX and CFD industry in Asia, the challenges of operating in this region, and the evolving landscape of financial services for Chinese speakers globally, listen to the full episode of the FinanceFeeds Podcast on your favorite streaming audio portal or our YouTube channel.

Sponsorship opportunities on FinanceFeeds Podcast

FinanceFeeds is the world’s premier online news publication for the global online trading industry. Our podcast series opens up new sponsorship opportunities for companies looking to tap into our niche audience. For more information, please email us at [email protected].

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