Industry predictions for 2017: Retail FX to remain highly competitive

Maria Nikolova

FinanceFeeds speaks to Jonathan Baumgart, CEO, & Atomiq Consulting.

FinanceFeeds continues to explore the FX industry outlook for this year, with the next Forex senior figure to discuss the major themes that brokers should consider in 2017 being Jonathan Baumgart, CEO, & Atomiq Consulting. Mr Baumgart kindly agreed to share his view on what’s coming in 2017 from a retail brokerage perspective.

He is well known in the US, having spent nearly five years at FXCM as a Sales Associate, as well as launching the firm’s Berlin office in 2010. Later in 2010, he joined Boston Technologies, where he was Director of Training and Development and, subsequently – Account Manager. He left to set up his own consulting business targeted at FX brokers, liquidity providers, white labels, and software firms.

Mr Baumgart struck an upbeat note regarding the dynamics of the retail Forex sector.

“Retail FX remains highly competitive. Despite regulatory changes that might slow down the industry, the extreme level of competition doesn’t seem to be going away anytime soon”, Mr Baumgart said.

He also highlighted a potential risk that looms for retail FX brokerages, as a result of the this highly competitive environment:

“To stay ahead of the game, it’s tempting for brokers to always look for “the next big thing” while losing sight of the basics: quality client support. An easy mistake is to focus solely on sales while neglecting the satisfaction of a broker’s existing client base. It’s not just my opinion but also known widely in sales that acquiring a new client is always more costly than upselling an existing relationship.”

A major consideration that Mr Baumgart noted is technology development.

“We focus heavily on technology and feel this year will be disruptive”, he said.

“MetaQuotes has signaled their intent to make a strong push for MT5 this year. All brokers should be prepared to hear more clients talk about MT5 and also research the platform themselves; a better understanding now is a great way to come ahead of these changes. I’m available to any broker who wishes to discuss MT5 in more detail, it’s a platform our firm is very familiar with”, he added.

The rapid advance that MT5 made last year were discussed and explained a number of times by FinanceFeeds. One the major reasons for the platform’s success is that it started supporting hedging capabilities.

Jonathan Baumgart

Next up, Mr Baumgart highlighted changes in the regulatory context. The end of 2016 brought a key development for UK CFD firms servicing retail clients, as the Financial Conduct Authority (FCA) unveiled its proposals aimed to beef up standards across the sector and ensure enhanced consumer protection. In addition, early this year, France enacted new regulations that prohibit the advertising of risky financial instruments, such as binary options.

Mr Baumgart said:

“Regulatory changes are a constant in the FX industry. Major themes will be the status of Binary Options within the EU, the FCA’s proposed leverage & client onboarding changes, and how CySEC handles industry pressure for stricter regulation. The FCA decision will be especially interesting, I feel a too harsh stance will push more business offshore.”

In conclusion, Mr Baumgart noted the difficulties that many FX brokers face when trying to open a bank account. FinanceFeeds has provided some extensive research on the topic, showing how a number of major banks, like HSBC and Barclays shun working with FX firms, especially with newly established ones.

Mr Baumgart said:

“Finally, 2016 posed many challenges to newly formed brokerages seeking bank accounts. We expect this to continue. Despite these challenges, we are one of the firms who offer several suitable bank account options within Europe. Interested parties can contact us for more information.”

Read this next

Digital Assets

Revolut receives FCA’s go-ahead to launch crypto trading

British fintech and banking firm Revolut has received a regulatory go-ahead to launch its cryptocurrency services in the UK.

Digital Assets

GBTC share is trading at 36% below bitcoin spot price

Grayscale Bitcoin Trust share has widened its discount relative to the underlying cryptocurrency held in the fund, the highest margin ever since its debut in 2013. Digital Currency Group’s flagship GBTC shares traded at a discount of 35.8% to net asset value (NAV) today.

Digital Assets

Crypto lender Nexo investigated by 8 US state regulators

State securities regulators in New York, California, Kentucky, Maryland, Oklahoma, South Carolina, Washington and Vermont are investigating crypto lender Nexo for allegedly failing to register its Earn Interest Product.

Metaverse Gaming NFT

Astar Network’s ad features 329 top brands to support Web3 in Japan

Blockchain innovation hub Astar Network is making strides in promoting the Web3 adoption worldwide. In yet another milestone, the smart contracts platform has run a national newspaper ad in Japan that set a new global record with participation from 329 blue-chip firms.

Digital Assets

Pyth Network welcomes onchain data from crypto market maker Auros

“By sharing our high-frequency trading data with a truly onchain decentralized network, we aim to foster innovation that will lead to better financial solutions for all participants.”

Digital Assets

Tokeny integrates Ownera to boost liquidity of tokenized assets

“The adoption of FinP2P will result in higher liquidity and better access to capital and assets by providing regulated firms with one secure point of connection to multiple digital asset networks across the globe.”

Digital Assets

BingX launches subsidy vouchers to cover user losses in copy trading

“With the introduction of copy trade subsidy vouchers, new users can easily try out trading strategies without incurring losses.”

Digital Assets

Talos expands sales team: Frank van Zegveld, Matt Houston, Hillary Conley

“The extensive leadership and industry expertise of these new hires will enable us to build long-lasting relationships as we continue to build out our global presence in EMEA and beyond.”

Executive Moves

FX and CFD broker Emporium Capital hires industry veteran Robert Woolfe as COO

His past experience within the FX and CFD industry includes top roles at Capital Index, London Capital Group, GKFX, ETX Capital, and IG.  “I’m delighted to be part of the Emporium Capital team and spearheading the brokerages global expansion plans”, he said about the appointment.