“Mind The Gap!” – The life and times of a man on the move Episode 40
The stuff world records are made of, ASIC licensed firms via the back door, kudos to Norwegian Airlines and would you sell your business for thin air?
In this weekly series, I look back on what stood out, what was bemusing, amusing and interesting during my weekly travels, interesting findings within the FX industry and interaction with an ever-shrinking big wide world. This is purely observational and for your enjoyment.
Monday: Roy Castle’s trumpet
Rather a remarkable feeling of elation ensued as the weekend drew to a close, giving way to a new week of interesting thought gathering during the working week, as I came to realize that I have made history.
On Sunday, March 31, 3000 motoring enthusiasts gathered in Lutterworth, Leicestershire and a day of some of the most enjoyable activity and interaction took place, culminating in a set of results and criteria being collated by our intrepid and dedicated organizers which has now been submitted to Guinness World Records in order that we now hold the world record for the longest ever procession of Volvo cars in history.
The event was held at Bruntingthorpe Proving Ground in Leicestershire, a circuit with a special place in my memory as it was there, 24 years ago, that I sat my final British Racing Drivers Association (BRDA) examination to gain my racing license, with some initial, and rather entertaining, precursory laps of the vast disused airfield and vehicle proving ground being completed at an average speed of 135mph (that means 165mph on the straights!) in a new-at-the-time Volvo 850 T5-R, a mid 1990s icon of the touring car championships.
The clubmanship, dedication and social brilliance of the 3000 participants made me very proud to have played an instrumental part in such a milestone event, leaving me only to say that we raised over £16000 for Breast Cancer Care UK, and absolutely shattered the previous record which was completed 9 years ago in Poland, and involved 570 cars. We managed to have a moving procession of 1574 Volvos of all ages and models, ranging from a 1924 PV4 in concours condition, through 1950s PV544 models, to the 1960 Amazon, 1970s iconic estate cars and 1990s performance classics, to today’s autonomous drive-equipped latest models.
A proud moment, and a great diversion from every day life. A quick stop to refuel my appetite on the way back from Bruntingthorpe in the XC90 completed a 12 hour day which began that morning at the Ullesthorpe Golf Club’s on-site hotel as my overnight stop – its parking area absolutely full of Volvos – before heading to the airport to begin the week’s work on Monday morning.
Tuesday: Australian licenses being abused for the offshore brigade’s marketing tricks
Whilst at the rather splendid UMA Co-working space in Stockholm’s central district, which is an ultra modern area on one of the 44 islands that make up this spectacular city that I would spend the next three days in, I woke up to an early for me, not so early for him phone call from a longstanding colleague in Australia with whom I often enjoy musing over the aspects of the structure of our industry that we all strive to improve.
One of the many things I absolutely enjoy about the financial technology and electronic trading business is that, even after almost 30 years, I am still very energized by the continual innovation and leadership that most of our keen professionals commit themselves to, this particular gentleman being no exception.
“ASIC has been telling new license applicants and recent applicants that the broker is only to service Australian clients.. This is hard to prove, as it is not a stipulation in the Australian Financial Services License (AFSL) that is administered by the regulator” he observed.
“I would guess that this has been an unwritten rule for some years, however now we are seeing ‘legacy’ brokers with AFSL shift their marketing to Europe, get a license and then shift their retail business to the Australian shores at 500:1 leverage with a reputable regulator” was the deduction of my colleague.
“This is a bit of a moot point because we know ASIC has stated that they do not want AFSL brokers to market themselves as regulated by ASIC to offshore retail clients as they they are not protected by ASIC, only Australian residents are which is a grey area, but this seems ASICs line in the sand” he said.
“As a result, here in Australia we have ASIC talking about toxic leverage at 500:1 and is hinting at it ‘wants’ to do something about it, and it can do something about it when the toxic product bill is passed. The upshot of this is that it is the same strategy as telling brokers not to service non Australian clients or they will get a visit from the regulator to look under the hood. We know that a lot of smaller, purely retail brokers pull dodgy stuff on clients, just see what happens if you are a client that consistently makes money and are bound by terms and conditions on what is abuse trading practices” he said.
“Therefore it seems to me that there are some AFSL brokers which are in a round about way able to do the same as brokers in the ‘islands’ by setting their companies up in a layered fashion, making it so that they do the same activity but disguise it as more reputable by using the credibility of an AFSL license” he said.
“I could name several which are doing the same shifty work on clients as the ‘islands’ brokers, that being aggressive sales tactics, personal advice, flash crashes from ‘liquidity providers’ which aren’t really liquidity providers but the dealing desks of parent companies, and these brokers are the ones we have heard about recently, and there are about 70 of them in Australia” he said.
Actually, my learned colleague did venture as far as to mention some names and I would agree that those he mentioned are a wolf in sheep’s clothing, mostly small and have been started by the blue-collar sales staff of other retail shops.
“These brokers must be flying on empty to pull these tricks at this time” he rightly said. “So they seem not to be able to help themselves, therefore when looking at this type of business tactic I have to ask myself what is an AFSL broker worth. It was reported a AFSL is worth $4,000,000 but sale requires ASIC permission, which is at least one advantage as there is no way any broker in the islands is worth anything as it has absolutely no IP at all and is simply as good as its last very worthless lead” he said. Quite right indeed.
We then moved onto some of the ancillary services that have been offered recently by the less reputable firms. “This is an example of what the feral FX margin brokers called ‘advanced tools” to take your trading experience to the next level. Economic calendar, alerts and believe it or not, a bonus sign on offer, and steak knives” said my colleague. Steak knives? Goodness me. Maybe they are to hack through the pile of elephant defecation which comes out of the salesman’s mouth when the ‘customer’ is being forced to deposit.
“We have also seen recycled nonsense which is not offered by the broker itself, meaning that these particular firms have invested absolutely nothing in their own trading infastructure. These are examples such as ‘traders enhanced experience with amazing new tools. That just means a white label MT4 platform in my opinion!”
“Yes of course terms and conditions apply. That equates to ‘80% of you, the retail traders will lose your money, but you will go down with an enhanced trading experience. Good luck, you will need it, and if you want to have a higher experience – trade with 500:1 leverage = your dopamine levels will go through the roof and you can relax with a state of mindfulness that this is the ultimate trading experience brought to you by here-today-gone-tomorrow FX!” he said.
Wednesday: Q: Can I pay for this in thin air and dreams? A: No!
Wednesday morning led to a very bizzarre conversation with a very sensible man.
If I were to make an educated estimate as to the current value of good quality FX related portals, magazines, economic calendars and other such ancillary media, it would depend massively on the sector, audience and product range. We have witnessed firms being sold for a few hundred thousand dollars, right the way up to DailyFX’s whopping $40 million acquisition in 2016 due to it being the UK’s most used economic calendar, and IG Group likely saw it as a linchpin as its core business is directly onboarded domestic market retail traders.
Without doubt, the value of portals, research entities, networking solutions and intelliegent engagement and marketing companies that empower their audience via knowledge and information are vital to our industry, as it is a technology-based online business, thus the valuations are quite high compared to those in other industry sectors, however my perfectly sane, level-headed aquaintance in Britain this week showed absolute astonishment when he was confronted by what could only be defined as a chancer in Cyprus wishing to buy his company for.. wait for it… non-existent tokens in a non-existent product owned and produced by a non-existent company.
Yes, sadly, the foaming at the mouth on the infrastructural deserts that are the Mediterranean islands with regard to absurd tokens in thin air appearing to be heralded as the replacement for proper tender has not died its rightful death yet.
The company which made the banal offer would ordinarily be of no significance and would be the subject of amusement, however unfortunately it was (and note the word was!) staffed by a plethora of wounded warriors who have worked for several FX firms in Cyprus over the course of the last 10 years.
What is it coming to, when former employees of well known retail FX brokerages have done the rounds to the point at which their options have dried up unless they paddle away from the islands or go and work for a dreamer who thinks he can reinvent the economy from a tiny, no-monthly-contract concrete box-style office in Limassol by issuing tokens which have even less relevence than a golden ticket from Willy Wonka.
My friend in the UK was approached by this individual whilst visiting brokers in Cyprus, and was told “I’ll buy your company for (enter sizable amount here, figure plucked out of thin air) but I’ll pay you in tokens.”
If these tokens were washing machine tokens, or Coca Cola bottle return tokens that would be laughable enough but these ‘tokens’ were a figment of a fully grown man’s imagination! What he really should have asked is “I would like your website and all of your IP. Will you give it to me for free?”
“I went to their office in Limassol last week” said my pal, with whom I sympathized as I looked out over the clear blue Stockholm archipelago. “Most of the people there I’ve worked with in Cyprus for years at different retail brokers” he said “however they’re all jaded and have ended up in this place which is really a shame.”
“The owner was a very odd man. He wanted to give me tokens for my business, and it ended when I said no. Just a day later it all ended for everyone else too, as the office was emptied of its staff as he couldn’t pay them!” he said.
This resonated with me, and I would actually add that it is not just these ICO chancers that are problematic and living in a very childish dream world. I have noticed advertisements for yet more miracle one-stop broker solutions shops which have become splinters from the very low rent side of the retail sector such as payments, education (an oxymoron if ever there was one) and other such zero sum lead-hawking non entities.
These new firms are mostly based in Cyprus and Malta and have rather unusual and derisory names which are made up from improperly spelled English.
It is quite simple. I cannot stress enough to all brokers in this business, that if something is mis-spelled, or looks low end, then it is very likely exactly that. Take a step back, and ask yourself if, when looking for something for your own non-business related life, would you buy a cellphone contract from a nice, reputable company with a name such as “Vodaphone Cellular Communications Ltd” or would you go to something called “Fonez 4 U”.
Would you trust a fast food restaurant in an unfamiliar location with a nice, clear name such as “Pret a Manger” or would you risk spending the next few days in hospital having frequented something called “Lickn Chickn”?
For things that are as key to your livelihood as service providers, or potential acquiring partners, why take a risk?
Thursday: The bumblebee flies anyway!
Thursday’s flight from Stockholm to Tel Aviv was one which allowed me to breathe a sigh of relief.
I have to hand it to Norwegian Airlines, a fabulous company which has been blighted by difficult and highly competitive conditions, and more recently, the downing of several of its Boeing 737-8MAX aircraft.
Norwegian Airlines took a bold step in an industry sector which is utterly conservative, that being to offer brand new Boeing 787 Dreamliner aircraft on many medium to long distance routes, especially those highly competitive TransAtlantic routes which are put out to tender regularly and only ever managed to be covered by huge, long established flag carriers from Britain or North America such as the evergreen Virgin Atlantic, or massively backed Delta, United Airlines or American Airlines, do the job better than all of them and keep the prices down.
On the shorter distances across Northern Europe and Scandinavia, the firm offers the brand new Boeing 737-8MAX aircraft and has free internet which works very well indeed (come on easyJet!) and a very keenly priced and very good quality in flight menu.
The downside is that the airline cannot make money. It is providing quite simply far too good a service for far too little cost, and is battling it out among the giant legacy airlines. I would far rather fly with Norwegian Airlines than with crusty old civil service-orientated, biscuit-tin-beige British Airways. Their aircraft are better, the food is better (British Airways is verging on impertinence by offering such foul fayre for such expensive ticket prices) and the whole experience is more modern.
As I drove to Arlanda Airport in Stockholm on Thursday morning, an element of doubt was in my mind, as last time I made that journey was just a day after the tragic accident involving an Ethiopian Airlines-operated Boeing 737-8MAX, resulting in my flight taking off, then two hours into the journey, making a u-turn and flying back to Stockholm, resulting in a four hour flight to nowhere because no airport was willing to take the risk of allowing the 737-8MAX to land in case of accident.
Norwegian Airlines had to down so many of its 737-8MAX planes at great cost, and I did wonder if my flight would be canceled, however it was business as usual and it was an exceptional flight. Well done Norwegian Airlines for handling a difficult and expensive situation on a tiny budget when concerning yourselves with imminent non-existence.
I, for one, hope you survive and prosper.
Right, I’m off to London.
Wishing you all a super week ahead!