FAANGs, Peppa Pig and Xi Jinping’s soybean retribution. Today, tech-led trading rules supreme, but its a tech-led approach based on very established principles. Here is our insight.
In a world in which retail traders and brokerages alike have been seeking the next attention-grabber to break away from the perceived stalemate created by 1231 almost identical products and trading environments bombarding the same potential and existing client bases with the only competitive edge that could have existed, that being a slightly lower spread due to the nature of the third party platform dominance that has punctuated 85% of the retail market since 2004.
The reliance on outsourcing has had another relatively toxic effect aside from the complete emulation of service by over 1000 retail FX brokers, that being the streamlining of thought processes into a uniform manner that has caused many to follow the same evolutionary path, including in some cases to succumb to desperation by jumping off the precipice of crypto currency trading, leading in some cases to tremendous losses.
In reality, the loudest noise being made by the cryptocurrency advocates is that by the former binary options fraudsters who have managed to shape-shift their previous schemes toward the current trend for crypto-everything, and the young media-orientated semi-anarchistic fringe bloggers whose railing against the mainstream is enthusiastic as their efforts at styling their beards.
Hence, the established trading fraternities of the world whose technological and market integration understanding is on par with many institutional desks and their platform and liquidity providers are aware that much more substantial asset class diversity is necessary to the point that virtual currency does not even register with them at all.
Such a folly is not part of the landscape of genuine trading, hence global leaders are equally interested in genuine new additions to the trading landscape, not just traders and brokerages themselves.
The leaders of the most important economic regions of the world do not have trade summits or emergency meetings about non-entities, instead concerning themselves with the performance of the stocks of their most prominent national enterprises.
Today, however, the enterprises may well be brick and mortar, but their product range is real estate-free.
Ten years ago, a world leader or economy minister would be concerned only if the stock of an oil company or large pharmaceutical firm dipped, or suddenly found itself under fire from newly established competition in the Far East, however today the Far East is the new global giant, and has leveled itself in terms of technology and internet commerce prowess with the West.
China’s domestic market-only internet system heralds over 996 million users, most of which are mobile-only, hence companies in the People’s Republic that dominate global markets are largely real estate-free, such as Alibaba and Baidu.
What has Peppa Pig got to do with Xi Jinping?
Today, a global leader who concerns him/herself with the stock of a legacy oil company would be written off as passe and out of touch in this post-petrochemical, Tesla-driving, app-orientated commercial world.
This week, China took aim at Donald Trump’s electoral base by announcing tariffs on soybeans.
Mainland China imports one third of US production, mainly as feed for livestock such as pigs, and it is not just real live pigs that have created this commodity market shift, but extremely popular anthropomorphic ones too, with Peppa Pig proving a big hit in Asia for Entertainment One.
The soybean tariff has angered the White House, and market volatility ensued due to several indicators and analytics platforms predicting a trade war, with volatility increasing, which is exactly what multi-asset derivative traders want.
Whilst companies offering a genuine multi-asset environment would have relished this last week, Jon Cunliffe, CIO at Charles Stanley had explained to British media that “we are not overheating here yet”.
On Thursday evening, the US President said he was considering a further $100bn of tariffs against China, in an escalation of a tense trade stand-off as a result of China’s consideration of tariffs on US soybeans.
Indeed, soybeans are a mainstay of the Chicago listed derivatives sector, and a major commodity on all of the Chicago exchanges, hence protectionism is understandable.
Yes, it may have been a retaliation by extremely protectionist communist China for President Trump’s $50bn worth of US tariffs already proposed on hundreds of Chinese imports, however the result of this was that soybean futures went down 2.6% over the week by mid-session on Friday last week. In 2017, China imported $13.9bn of US soybeans, 61 per cent of total US exports and nearly one-third of annual soy production.
These are absolutely the aspects of the market conditions that brokerages should be looking at if they want to elevate their product range and subsequently their client base into the realms of the $50,000 minimum deposit and 10 year lifetime ranks. FinanceFeeds was told in Chicago last year by a listed derivatives exchange senior executive “If you want to know how much a commodity is worth at any time to the nearest cent, ask a farmer.”
Back to the subject of internet giants with no real estate, Swedish music streaming service Spotify went public on Tuesday, some ten years after the company was formed. British market analyst Garry White explained that thi listing is important for a number of reasons. “It comes at a time when technology shares have seen a period of weakness, especially the high profile FAANGs (Facebook, Apple, Amazon, Netflix and Google –owner Alphabet) – and it has been a success. Spotify’s shares also listed in an unusual way. Because there was no requirement for the company to raise new money, Spotify came to market via a “direct listing”. This cuts out investment banker fees, so shareholders save money.”
Last week in London, at the launch of the new Saxo Bank intitutional trading platform SaxoTraderPRO, multi-asset trading was most certainly on the agenda, as it is very much part of technology-led Saxo Bank’s ethos toward catering for the needs of institutional and advanced traders worldwide. The FAANGS stocks were most certainly covered in addresses by Saxo Bank executives to the 120 invitees at City Hall.
Other evidence of the multi-asset strength for quality providers include Swissquote’s domestic market Swiss customer base, which has access to over 2.5 million asset classes on the company’s multi-product platform.
Yes, Swissquote advertises cryptocurrency trading and has a distinctive FX spot presence, however its largest business is its multi-product execution.
In terms of FX, Swissquote has around 400 million CHF in assets under management, which means that Swissquote is respected highly by the Swiss banking authoriites. FX represents around 200 products available via Swissquote, however the 2.5 million products that the firm offers are executed not just on an OTC basis but the majority are on NICE, EUREX, and SIX.
Modernity and technology is certainly the way forward in terms of the evolution of asset class priority, however its the large multinationals with listed stock that turn the heads of world leaders, rather than a loud noise made by small mavericks and anarchists.