FinanceFeeds Podcast Ep. #20: Tickmill’s Ingmar Mattus on Dubai license and futures

Founded in 2014, Tickmill is headquartered in London and has licensed entities operating in the United Kingdom, Malaysia, South Africa, Cyprus and Seychelles. And now…the UAE through its UK entity.

Yes, Tickmill UK announced the opening of its representative office in the Emirates Financial Towers as it secured a DFSA license in Dubai. This new milestone for the Tickmill Group will serve as a springboard for the broker to expand into other regions, including Kuwait, Qatar, Oman, Bahrain, North Africa, and Saudi Arabia.

A constantly changing regulatory lanscape

It was in response to this milestone for Tickmill that FinanceFeeds Editor-in-Chief Nikolai Isayev spoke with Ingmar Mattus as he looked to learn more about the move and Tickmill’s co-founder’s views on the brokerage industry at this point in time.

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Ingmar Mattus shared that the Dubai DFSA license is Tickmill’s sixth license and that the MENA region is by far one of the fastest-growing regions within the brokerage space and beyond, including asset management, real estate investment and more. Mattus, who has 20 years of experience in the industry, commented on the regulatory landscape and Dubai’s business-friendly policies by saying that “as long as you have a clean regulatory track record, you are more than welcome to launch an office and start a business there”.

On that note, Tickmill’s co-founder admits that the world has changed a lot, especially the regulatory environment, and jokingly says that nothing can be said to be certain in the financial industry except death, taxes, and “constant regulatory changes.” Still, the executive clarified that “tougher regulations are a necessary part of building a prosperous future for the industry. Moreover, clients expect that, even in offshore jurisdictions, brokers make sure that clients can withdraw their funds at the end of the day if they so wish.”

Stricter regulation, however, increases operational costs, which is expected to drive consolidation within the brokerage industry as the business grows more sophisticated. Mattus references the business practices of MetaQuotes, saying, “it is much more difficult today to get an MT4/5 white label”. He comments that “even offshore jurisdictions are tightening up” by “monitoring what regulators are doing in other jurisdictions, for example, in Europe, and trying also to enforce similar regulations”. Mattus comments that “it takes only one bad apple to destroy the reputation of the industry in a particular country or region”.

The trend is toward exchange-traded products: Futures, options, and equities

Moving on to Tickmill’s product offering, Nikolai Isayev asked about the broker’s venture into futures and options trading after finding that many institutional clients who originally signed up with Tickmill for the FX or CFD offering also trade on the futures markets.

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Tickmill expanded its product portfolio with the launch of futures and options trading to capitalise on the growing popularity of such instruments outside their traditional users. As part of its plans, the broker has partnered with top-tier regulated exchanges in order to lower trading costs and let them tap into their range of futures and options aimed at smaller investors.

Ingmar Mattus says the broker is experiencing a meaningful upside in demand for futures trading, and it is a process of constant development as exchanges in the US and Europe continually roll out smaller and smaller contracts that are more understandable and comfortable to retail traders. According to Mattus, clients feel safer when trading exchange-traded products (ETPs) because there is a regulated venue. He stated that the trend within the brokerage space is toward ETPs: not only futures and options but also equities. Tickmill, at the moment, is focusing on building a presence in the futures and options space and expanding its client base.

Transparency is paramount for Tickmill, and its exchange-traded offering couldn’t be more transparent. While in the OTC market there are different bid-ask prices across brokers, when trading futures and options the orders and execution go through a regulated venue, and there is only one price on each ETP. “Everyone across the world sees the same prices, which is extremely beneficial for clients”.

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“I’ve been personally trading futures and options for the last 20 years. My heart has always been on the ETP side, but it’s so much easier to launch an FX/CFD broker than a futures broker. We built a presence on the FX/CFD side, and now we can do the same on the futures side”, he concluded.

US crypto regulation and MiCA

The addition of exchange-traded products is overwhelming proof that the FX industry is going multi-asset, and, on that note, we’ve also been following the recent developments within the crypto space with the approval of the MiCA regulation in the European Union. “It’s an extremely complex topic”, Ingmar Mattus said. “A lot in life depends not on the actual regulations but on the facilitators of the business. We can have the best possible regulations for crypto, but if the facilitators, such as banks, for example, are not very supportive of the whole industry,” then regulation is of no use. However, as Mattus states, “this has always been the case with innovation, it is always ahead of regulation, and regulators take time to analyse things and then come up with solutions.”

Even a crystal ball wouldn’t know what will happen in the future in Europe and the US in regard to crypto, he added, but he believes crypto will remain, one way or the other, “but whether one can build a big business out of it is another question”. Mattus stated that he is aware of some firms still trying to push cryptos forward as a single product line while many firms have already decided to expand their product offering to include futures, options, and CFDs in order to solidify their business model.

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Regarding the MiCA regulation, Mattus commented that “there is a likelihood that the existence of a new regulation might bring new investments to Europe, and hopefully, some countries will take advantage of it and promote their services”. Howerver, it is highly unlikely that the MiCA regulation will bring massive growth in Europe when it comes to crypto since “at the end of the day, banks are really hesitant over this space”. Still, MiCA is a positive outcome as countries and regulators shouldn’t strangle innovation but rather try to nurture it and put their limits. “We live in an open world, so if a door shuts in the US, business will go elsewhere”. The UAE is an example of an attractive hub for crypto nowadays, while Estonia reviewed its rules recently, forcing out thousands of firms. “Only 10 or 20 were able to keep their license in place”.

US bank collapses and the risk of contagion

FinanceFeeds covered the FIA Boca event in Florida in mid-March during the banking panic with the collapse of Silicon Valley Bank, Signature Bank, and Silvergate Bank. There, Nikolai Isayev encountered Ingmar Mattus for a quick chat about the crisis happening in real time. Now, they decided to dig deeper on that topic. Mattus believes European banks are in better shape because regulators, were perhaps more up to the standards when regulating this sector in the last 10 years.

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As to the United States, Mattus says, “I don’t think we’re out of the woods when it comes to US banks because the trust element has been hit”. Mattus, who started his career in the banking sector, recalls one of the first things he was told on the job, “Banks really sell one thing: trust. When trust is gone, it’s almost impossible to bring it back. It takes years, decades to build trust, but it can be taken away in a day or two”.

Midsize banks, for example, are definitely in a very fragile situation because of the panic the collapses have caused in the US, and people may pull funds from a perfectly fine bank. In conclusion, the bulk of problems are still ahead of us, Mattus said, especially if you factor in the turmoil with interest rates.

Ingmar Mattus set up Andromeda to invest in startups

Nikolai Isayev ended the podcast by asking about Ingmar Mattus’ Zurich-based private equity firm Andromeda Capital Partners Suisse AG. The firm has a focus on fintech and financial services firms and has recently invested $2 million in Change, a Netherlands-regulated multi-asset investment app founded in Tallinn in 2016 by Gustav Liblik and Kristjan Kangro. Change is a mobile-first multi-asset platform that includes cryptocurrencies, stocks, derivatives, and yielding assets with the goal of empowering wealth creation globally. Andromeda acquired a 4.5354% stake and is open to buying a larger slice in the future.

Mattus commented on the current situation of the startup sector in Estonia by saying that “funding markets for startups disappeared and valuations dropped significantly”. Because of that, he started getting offers by startups on a frequent basis. “There are a lot of opportunities, and I’m planning to take full advantage of that.” His strategy is to invest in a space where “he is most knowledgeable about such as trading related investments, financial services related businesses”.

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Ingmar Mattus is particularly fond of investing in businesses from Estonia, a small and agile jurisdiction that has become a melting pot for startups. On that note, he also is Executive Board Member of the Estonian Chamber of Commerce in Switzerland in order to promote Estonia as a country for business people and also promote Switzerland.

“It’s an interesting project in the sense that you get to meet business-minded people, entrepreneurs and startups and try to facilitate them, launching their businesses in Estonia or Switzerland. I didn’t think twice when asked to join because I like Estonia and Switzerland and their people.” “Both are relatively small countries in terms of population”, he said, “we are quite similar culturally, very rational and very keen on keeping standards and pointing to Estonia as a Northern European country whose people historically focused on saving for winter, always thinking ahead and planning. Mattus also observes German influence in Estonia in terms of culture, language, and even architecture. That is why Ingmar Mattus felt at home when he relocated to Zug in the German-speaking region of Switzerland.

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