FMLS 2022: Tickmill’s Ingmar Mattus on market volatility and the future of retail FX

Ingmar Mattus, the Co-Founder, Executive Director & COO at Tickmill Group, provided contextualization regarding the FTX collapse, the MetaQuotes suspension from Apple’s App Store and shared insights on the future of the FX retail industry.

The Finance Magnates London Summit 2022 may have ended, but FinanceFeeds continues to bring you powerful stories from CEOs, executives, and entrepreneurs from the most influential brokerage firms.

FinanceFeeds Editor in Chief Nikolai Isayev sat down for an exclusive interview with Tickmill co-founder Ingmar Mattus and the first thing he wished to draw upon was his impression about this year’s edition of the FMLS summit.

Mattus said the expo was a complete success for both organizers and participants. He also noted that the London Summit has earned the trust of key finance and Fintech influencers and is renowned for generating business and networking opportunities.

“It has been an interesting event. We’ve come here almost every year, and it’s a good place to meet partners, technology providers, clients, and introducing brokers. It’s definitely one of these events that we attend every year with great pleasure.”

We started our industry discussion asking Mr. Mattus about Apple’s decision to remove the MetaTrader 4 and MetaTrader 5 platforms from its App Store. This news came as a big shock that reverberated through the retail sector as iOS-based users may not be able to trade forex on their devices anymore.

As Tickmill COO explains, this was undoubtedly a major setback for MetaQuotes, but the company acted fast with the release of a new web terminal for MT5 to make it basically compatible with Apple devices. So, we asked if this could serve as a permanent solution? Or is it still temporary in the sense that traders might not be ultimately happy with it and will continue to find alternatives?

Mattus firstly acknowledges that the MetaQuotes apps have revolutionized how traders access the financial markets. He added that online trading isn’t the same as it had been two decades ago when the ultra-popular MT4 trading platform surfaced. With regards to the removal of these apps from Apple’s App Store, Mattus said there has been a lot of discussions speculating if there is a viable alternative indeed.

How long the ban will exist is unknown. But fortunately, there are safe alternatives, both in the form of other products and cautionary tactics traders can take to keep their app functional.

These measures could mitigate the damage faced by MetaQuotes following Apple’s ban. But the failure to resolve the issue at its roots could force traders to look elsewhere.

Mattus also notes that it has become imperative for some brokers to consider developing their own apps to stay immune from risks and problems in the future.

“First of all, I think MetaQuotes has done an amazing job in terms of developing these platforms over the years, and I believe none of us would be here today if these products were not around. But at the same time, it’s definitely problematic that the app is not there. And when traders are accustomed to a certain platform, and suddenly it becomes unavailable, that creates friction for both clients and brokerage firms, because we have to find alternatives, which is not an easy job.”

Tickmill already has its proprietary, self-developed mobile app. So, we were curious to ask Mattus if their traders have actually flocked to that app in absence of MetaQuotes solutions.

Mattus highlighted that Tickmill has been developing tools to enable a seamless trading experience.

“For sure, we have seen tremendous growth in terms of the user base of our own app. For the better part of the last two and a half years, we’ve been developing our own technology. That said, I would still hope that the MetaQuotes apps will become available on the App Store again.”

Ingmar emphasizes the magnitude of this issue as even brokers that have developed their own apps a long time ago were still offering MetaQuotes products to their client base. Therefore, the situation is a lose-lose for MetaQuotes, brokers, and traders relying on the app.

“I believe there will always be third-party apps that gain popularity and even the brokers who develop their proprietary technology will still have to look around and introduce these products to clients.”

The Tickmill co-founder believes that at least well-capitalized brokers must invest resources to build their own trading applications that not only fill the gap created by Apple’s ban, but also meet traders’ expectations. Even if they will continue to leverage the power of MetaTrader, they must ensure a truly stable experience for their traders.

“The recent development has shown that it is mandatory for brokers who have good finances to develop their own software, because at the end of the day, if a third-party solution fails, the clients look at us, not the platform provider. So, we need to make sure that whatever technology we put out, it must be reliable. It’s also a moment for brokers to look into the mirror and see how they can mitigate similar issues in the future.”

The collapse of Sam Bankman-Fried’s empire came as a surprise to many. As more information unfolds, it’s hard to imagine the space bouncing back quickly from this plight.

Nikolai Isayev asked if the FTX fiasco was the crypto industry’s Lehman Brothers moment, referencing the 2008 collapse of the investment bank that sparked a global financial panic.

Ingmar Mattus pointed out that while the FTX collapse may have had a severe effect on the broader market, traditional CFDs brokers were not those who bore the brunt of the impact and were not directly hit by the storm. However, he dismissed suggestions that the crypto industry will disappear, despite a much-needed change as a result of the FTX failure.

Mattus also pointed out a few advantages connected to trading CFDs on cryptos compared to the underlying asset. For example, CFD brokerages that are licensed by sound financial regulators, offer clients a safe and regulated environment to trade. Most crypto exchanges however do not have this regulatory protection. FTX customers learned this the hard way.

“There is a lot of caution among clients in various sectors of the financial industry and, and people are looking, and trying to figure out if any of their counterparties had exposure to FTX.”

“In terms of the crypto products as a whole, I don’t believe cryptocurrency will disappear. But what this incident and some previous incidents have shown is that the decentralized model where there are no central authorities or regulators involved doesn’t work. The result of the FTX collapse, as we heard from the US CFTC chairman, is that there is going to be a tremendous push from the regulators to control this whole space. Also, we understand that for the retail audience, probably the best venue for crypto-related products is a regulated futures exchange, where brokers are on one side, and the clearinghouses on the other one. This thoroughly tested model ensures each and every party takes its own responsibilities.”

The question now is how much worse it’s going to get as the contagion is spreading through crypto markets. This is like what happened in the wake of Lehman, but, once again, there are no authorities to ride to the rescue.

Interestingly, Mattus said he attended a number of conferences recently and even among venture capitalists, many people are saying that if you’re looking to raise funds now for your startup, then try to avoid words like crypto and blockchain in your pitch.

So, we touched upon crypto, but other business parallels have been drawn as well. We asked Mattus about the effects he expects on the side of the FX industry going forward in 2023.

Mattus believes that retail FX brokers are bracing for further consolidation. The past few years have seen a flurry of structural change, as regulators continue to clamp down on what they deem risky products.

“Some consolidation is probably expected in Europe given the challenges regarding market conditions, regulatory hurdles, reporting requirements and uncertainty about regulations.”

The question, then, is which firms are best placed to scale up. Mattus believes it will be those who are well-capitalized and regulated. He expects the number of retail platforms to shrink, particularly in Europe, where participants are feeling the strain from strict regulatory requirements.

Tickmill co-founder further explains that a natural consequence should be a wave of consolidation on the market. Small brokers, unable to withstand regulatory pressure, the inflationary environment, economic crisis and strong competition, will naturally disappear from the market. As a consequence, large brokers are expected to have a growing client base. He also offers a piece of advice for firms with a good capital base who are trying to enter new markets; to focus on technology, marketing, and sales to grow their business.

“I think where the industry has been going and will definitely continue to go is fully multi-asset. I believe the industry is going to consolidate further. And it’s very likely that Europe is going to see the same trends that took place in the US many years ago, where at the end of the day, there would be a handful of brokers remaining, namely those who are extremely well-capitalized.”

Mattus cited Tickmill as an example when we compare the systemic risk that the clients have with typical brokers relative to brands such as Tickmill which has a strong 100 million EUR of net equity capital, and without a single creditor. That clearly reflects a massive disparity in terms of the counterparty risk, though most retail clients do not comprehend this.

“That was probably triggered also by the recent MetQuotes incident as brokers are increasingly looking towards building their own technology. Even if you think about the interest of shareholders, the valuation of a firm that operates on the basis of their own technology is way higher than a firm that operates purely on the basis of third-party technology. It’s also an added value when you operate on your own technology, as you provide a very unique experience to your clients.”

Another remarkable indication is that it’s a little bit easier now to hire people, compared to the last 10 years, Mattus added. At the time when the capital was freely available to any project, it was extremely difficult to hire talents because everyone was paying insane salaries to development folks and the staff in other functions.

“I believe that only firms that enjoy a good capital base, solid technology, excellent customer service with a localized approach will survive because you need to have a really stable operational model to withstand these inflationary and economic issues.”

Switching to the institutional side of Tickmill’s business, we asked the COO if there were any updates on their offering for this particular segment. 

“We have done a lot of work on the futures and options side. What we’ve seen over the years is that many of the institutional clients that originally signed up with us for the FX or CFD offering also trade on the futures markets.”

Mattus also noted that Tickmill has expanded its product portfolio with the launch of futures trading to capitalize on the growing popularity for 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 aimed at smaller investors.

Established in 2014 with headquarters in the United Kingdom, Tickmill is a group of companies with UK FCA, CySEC, SC FSA, South Africa FSCA and Labuan FSA licenses.