Holding brokers accountable: An insight into a new disruptive product

Many companies claim to be disruptive, but only a handful really achieve true disruption for an industry. I had the privilege to have been introduced to just such a company through a press release from the Financial Commission a few days ago. Although still in its infancy, I believe that it has the potential to change retail Forex forever.

When one decides to buy the latest gadget, most of us browse the Internet to get an idea of price. For example, one retailer may be more expensive but offer free shipping, another may be cheaper but the item needs to be picked up in-store, yet a third retailer may be the cheapest with free shipping.

This type of price comparison keeps retailers honest, competitive and allows the consumer the ability to make his own decision on based on factors that are important to him.

Online shopping has in of itself become the “regulator” for retail shoppers. We don’t see government bodies regulating the price we pay for a new gadget, therefore to be competitive, retailers keep themselves in check, otherwise they would go out of business because online shopping has created complete transparency for the consumer.

MIFID II is undoubtedly front-of-mind for all industry professionals, but retail traders seem to be completely oblivious to how these new regulations affect them.

This new regulatory framework will have far reaching consequences for how brokers execute and settle their trades, but will the trader really benefit? The average man on the street really only wants to be assured of one thing – that he/she isn’t getting ripped off by his broker.

Welcome onto the scene VerifyMyTrade. It’s a website with one simple idea in mind: allow a trader to see if they paid a reasonable price for their transaction. The service consolidates published retail price data from a few dozen retail Forex brokers, creating some basic statistics describing what a fair price would have been for every second of the day.

Of course VerifyMyTrade doesn’t allow traders to “shop around” before making a transaction, but the fact that traders can look up their historical trades would provide the consumer with one of three things – confidence that their broker isn’t ripping them off, definitive proof that they need to change their broker, or, enough information to know they are paying a premium. Whatever information a trader learns from the service, it’s a step forward in empowering traders and allowing them to hold their broker accountable for their actions.

Despite their knowledge of different brokers’ pricing, I respect the way the developers are declining requests to recommend a broker based purely on pricing.

In a way, this position is an acknowledgment that pricing is not the only factor in the selection of a broker – tools, education, platform, customer service, jurisdiction; these are all factors that traders should take into account in their selection process.

Although the website’s current offering is aimed at traders, I am told that development of an API is in progress. This API would allow regulators and money mangers to check the fairness of pricing. I am of the opinion that brokers themselves should subscribe to the service as a tool that gives their customers peace of mind that they are open and honest, as well as allow them to handle price queries in a quick and timely manner.

All in all, I am downright impressed with the entire concept. Well done to the team at VerifyMyTrade.