iFX EXPO Dubai: Markets Direct CEO Joseph O’Mara shows the way out of CFDs

Rick Steves

FinanceFeeds went to the United Arab Emirates last week to meet the trading industry leaders for the first time since the pandemic at the iFX EXPO Dubai. Being face-to-face again was a memorable experience that attendees will carry with them for years.

Among the leading event-goers were the Markets Direct team, representing the true Direct Market Access (DMA) liquidity, credit, and technology solutions provider.

FinanceFeeds’ Editor-in-Chief Nikolai Isayev spoke to Joseph O’Mara, Chief Executive Officer at Markets Direct, to learn how fast the multi-asset trading technology provider is onboarding broker clients after having launched its platform a few months ago.

Markets Direct Gateway Hub brings together both Cash Equities, Futures, and OTC markets in a single cross margined account, offering access to fractional shares and commission-free trading.

The event in Dubai has certainly helped to get the message and product across. “Tremendously beneficial show. We didn’t know if we would be seeing tumbleweeds through the place, but we brought 130 business cards and we gave them all away in the first day.”

Commission-free trading is all the rage, but some within the industry still ask if it is really an opportunity for brokers. “It’s a fast-growing part of the business with over a million accounts being open. If it’s profitable or not is debatable from the business side”, said Mr. O’Mara.

“People keep calling for democratization and commission-free trading provides the opportunity to trade what they couldn’t afford. And for an exchange broker, it gives the ability to move money to an asset and then margin it and trade other asset classes such as FX and CME futures”, he further explained.

Markets Direct also addresses the recent dynamics in the capital markets, with traders increasingly flocking towards equities in search of volatility.

“I’ve spoken to more than a hundred brokers in the last 24 hours and they’re all seeing a diminishing return in FX only. The US equities offering is a means to get people in the market and trading”, he said, adding that as Revolut and others are experiencing explosive growth, fractional shares trading could do the same for brokers.

Fractional shares also address the needs of younger generations as the industry experiences a change in demographics with the rise of social trading. “How can a 20-year old kid trade the Berkshire Hathaway (BRK.A) stock, worth $432,800.00 today? Now, they do have access to it”, said Mr. O’Mara.

The company’s Gateway Hub provides a quick, fast, and easy way to trade the markets, but such kind of technology came at the expense of sweat.

“It took us four and half years to build this: the back office, order routing capacity, bandwidth, cross margining, and everything. It’s not an easy build”, he said. “I don’t know any other companies doing it.”

The trading industry is going multi-asset but it is not by chance. CFDs are going out of favor due to pressure from the United States, Mr. O’mara stated.

“There are a lot of treaties out there, a really complex matter. They are not happy that people are copying US exchange products and not paying US tax on them, essentially.

“I think single stocks CFDs are in a big hurdle. The US government puts tremendous regulatory pressure. We’ve been approached by many brokers saying just that: a big hurdle to stay in business”, he continued, adding that the movement out of CFDs is clear as day. Search engines show most CFDs going down and stocks going up.

And who is currently reaping the benefits, Robinhood and other neobrokers? “For sure. Their growth is unbelievable. It’s coming from kids. They don’t believe in banking. They want to leverage assets and they’re putting everything in stocks”, he explained.

Gateway Hub was launched to address the issues above-mentioned, including corporate actions, dividends, and IRS reporting, which are all handled by Markets Direct.

The platform allows to utilize 50% margin on a stock portfolio to trade FX, Futures, and Cryptos, and customize asset offering to include regional Futures exchanges and local shares.

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