FXCM US exit as a business opportunity – AMB Prime’s Paul Orford elaborates

The various dimensions of the impact on the FX industry from the ban on FXCM and its principals from the US market are gradually becoming apparent, with employees losing their jobs, clients being transferred to GAIN Capital and uncertainty mounting amid international clientele and partners’ network. At the same time, the exit of FXCM from the retail FX market in the US may be viewed from another perspective and that is – as a certain business opportunity.

FinanceFeeds spoke today to Paul Orford, Head of Institutional Sales at AMB Prime, who agreed to elaborate on the topic.

The sad note

“I am sad for the loss of employment for the 150 employees who have been caught in the cross fire, hopefully they will go on to bigger and better things”, Mr Orford said.

The positive note

He then struck a more upbeat note, reminding us that the January 15, 2015 events were also seen as the end of the industry by many, but the FX sector moved on.

“The industry will just evolve like it always does, similar to post SNB many thought it was the end of days. Many told me that they believed the industry was finished. It may have changed to the way it was prior to SNB, however we are still in a thriving and healthy industry which is always going to stimulate me with its fast moving and dynamic components”, Mr Orford said.

Prime Brokerages and FXCM’s exit from the US market

FinanceFeeds then asked Mr Orford on what FXCM’s exit from the US retail FX sector means for for prime brokerages. He explained that this is in fact an opportunity.

“In life everything is an opportunity. This will give space to others in the market as perhaps new providers will be sought for, along with partnerships that will perhaps be looking for a new home for their clients” – Paul Orford, Head of Institutional Sales, AMB Prime.

He then underlined the essential components of a good prime brokerage partnership.

“The key with any Prime Brokerage relationship is based on unwavering confidence. If a client has any hesitation about your services or transparency, this can lead to a death spiral in your business”, he said.

Would IBs try to become FX brokers?

Given the latest developments in the US market, we asked Mr Orford whether he thinks that this would push IBs to become FX brokers.

“Over the years that I have been involved in FX I have known the same retail IBs I worked with many years ago to help them in making their own brokerage. This has been on the increase in the past several years. Moreover where we have been able to assist them is that we have strong partnerships with proven tech providers and related services required”, Mr Orford said.

Commenting on the challenges for such a transformation, he noted:

“Where they do need help is understanding the back end as they are usually fantastic at marketing and generating revenue, however the back office functions along with risk management as this is new to them. As a result of this it can be a challenge for them if they have come from a profit and loss deal as an IB to having to understand the full agency model”.