There are Still Success Stories to be Made in Forex – Guest Editorial
“The biggest difference, in my opinion, is the proliferation of fraudsters and the damage it has done to the industry. The new EU regulations sent us all into a panic wondering what they will throw at us next, but the tighter controls have become essential” – Chen Ben-Nun, Head of Sales and Business Development, Leverate
By Amram Margalit, Leverate
Not too long ago the financial publications of the world had begun to bemoan the future of the Forex Industry. Headlines such as “The Glory Days of Forex Have Passed” and “The Forex Market is Shrinking” would not have been unusual in prominent publications like the Financial Times or Bloomberg.
Some veteran Forex traders recall the glory days of unregulated, high-stakes trading, when high-tech was a “gimmick”, and impending regulation didn’t feel like the Sword of Democles hanging over the success of a business.
“In my first years at a brokerage, there was minimal high-tech trading, and automated trading was not nearly as prevalent as it is today.” Said Chen Ben-Nun, Head of Sales and Business Development at Leverate. “The biggest difference, in my opinion, is the proliferation of fraudsters and the damage it has done to the industry. The new EU regulations sent us all into a panic wondering what they will throw at us next, but the tighter controls have become essential.”
What was once a respectable industry had its name tarnished by forex frauds, binary options, and other nefarious broker tactics, designed to make the retail trader fail and the broker win. As a consequence of these damaging players in the Forex market, banks and other payment processing services had no option but to label Forex transactions as “high-risk”, and restrict deposits to investment firms not under strict regulation.
To curtail poor practices and protect traders from unscrupulous brokers, regulation has evolved into a strict compliance machine, with client protection at the heart of its ethos. The introduction of MiFID II in the EU has made business extremely tough on unregulated and unlicensed firms, forcing them to either close or get compliant. CySEC has recently announced its plans to ensure conformity and compliance across its licenced firms, and the warnings of minimum €5 million fines are no joke.
Fintech has progressed in enormous leaps in the past decade, with automated trading becoming ubiquitous in any trading arsenal, and trading platforms making access to forex and derivative markets much easier for retail traders. Add in the pervasive nature of the internet, and the competition has become incredibly intense.
Despite raging competition, tight controls and restrictive regulation, Forex brokers are still managing to make significant profits from their businesses, proving that the Forex industry is far from dead and gone.
“It may not be as easy as it once was, but making a profit in the Forex industry is still doable”, says Head of Customer Success Department at Leverate, Pablo Schvartzman. He also indicates that there is a key requisite for brokers to gain an advantage in this fiercely competitive market.
“Opening, maintaining and succeeding with a Forex brokerage demands so much more than it used to. Reporting structures, liquidity, compliance and tech require an all-encompassing solution, rather than dealing with multiple 3rd party providers. Leverate’s full solution package covers everything, from trading platforms and servers to reporting tools and compliance measures. We even build the broker’s website”.
“By taking a blanket approach to the bureaucracy surrounding Forex licensing and regulation, brokers have more resources to devote to making their brokerage profitable”, concludes Pablo.
Taking a detour into different streams
While it’s easy to say that you can give a fledgling brokerage an edge in the industry, there are also seasoned veterans fighting to maintain their edge and provide more value to their clients in this saturated market.
Mrs. Ben-Nun had a few things to say about keeping up with the times. “Defending your position will only take a brokerage so far. Brokers need to maintain their development into new streams and emerging technologies, and to exploit new opportunities.While having a comprehensive brokerage solution is a perfect first step, at Leverate we are taking it even further with Lead Generation tools. It could be a dedicated education website that directs hot-leads straight into the client’s CRM, or a branded trading game,” says Mrs. Ben-Nun. “It’s not enough to have the brokerage working efficiently and compliantly if they don’t have the leads.”
“Another advantage that Leverate is offering is what we call an ‘active compliance module’. Our Regyoul8 solution is designed to deal with the broker’s legal requirements, while helping him use this information for both internal management and external marketing efforts. EU and AML compliance measures are legally required, but they are also a significant benefit for increasing a broker’s reputation and improving their client retention and acquisition”.
Despite all the changes in the Forex business, it continues to be a lucrative industry for those players with the knowledge and intelligence to implement the perfect methodologies. As Mrs. Ben-Nun sums it up: “Sharp minds will continue to seek out smarter and better approaches to technological superiority, broadening their reach, and keeping a tight reign on their budget, which will provide significantly better results.”
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