What it takes for a retail FX broker to succeed in APAC and be recognized for it – An interview with easyMarkets Australia
“We are trading tool innovation leaders, our dealCancellation system being particularly important. This allows traders to effectively emulate the last look practices which are usually reserved for Tier 1 bank FX trading desks and creates a tremendous amount of trust in such markets, especially China. We also have a new product that we are about to launch called ‘easyTrade’ which is effectively ‘no margin trading’ on 30 minute, 3 hour or 6 hour options” – Daniel Byrne, Managing Director, easyMarkets APAC
Whilst London, New York and Chicago are the evergreen homes of the world’s most important financial services and electronic trading ecosystem, be it the large banks of Wall Street and Canary Wharf, or the world-dominating derivatives exchanges of State Street and Michigan Avenue along with their vast internal R&D departments and home grown trading systems, other parts of the Western World are literally infrastructural and financial voids.
The dominance, organizational accurateness, industry knowledge and finely honed technological prowess of these large commercial nerve centers are key factors in their establishment as comprehensive focal points for all components of the electronic trading business that now includes platform development, liquidity distribution, algorithmic trading entities, vast retail brokerages and a concentration of FX dealership within the confines of the plate glass walls of just six banks on the shore of London’s docklands.
Indeed, retail brokerages with any mettle and might are all focused on London for their Tier 1 liquidity which often comes from said banks and is distributed via non-bank Prime of Prime brokerages which are of British, American or Australian origin, however whilst the financial centers of the world are, and likely always will be Western, when looking at large parts of mainland Europe from a customer onboarding perspective, most retail FX brokerages today see a vast expanse of bureaucracy, lack of acumen, infrastructural backwardness and in some cases a negative return on investment.
London may be the technological tour de force on the Eastern side of the Atlantic, but the vast continent that lies just south of it is being eschewed by brokerages in an ever increasing fashion.
Instead, established retail brokerages are concentrating their efforts on South East Asia, and the region which falls under the corporate ‘Asia Pacific’ term.
This region is far more aligned in terms of technological modernity and financial markets-driven ambition than mainland Europe, hence whilst Britain’s retail giants continue to serve their loyal domestic-market clients via their own proprietary platform and not requiring a dependence on European customers, brokerages of European origin have a substantial drive toward Asia.
In the retail electronic trading business, development cycles are rapid indeed. A few years back, say in 2012, many management consultancies and corporate strategiests used to look at 2020 as a time horizon, demonstrating a window of eight to nine years. But in 2017, such strategists are still considering 2020 to be a time horizon for a newly begun project, hence it is now a three year cycle from beginning to end.
The relevance of any strategy here and in the future is only going to be three years or so for new phenomena, however for existing companies to approach new markets and develop new products, the time cycle is down to as little as six months. There are going to be no strategies which are going to be relevant for the next eight years, 10 years, because the market dynamics are just changing and evolving so much. The frequency of multinationals revisiting their strategic plans has actually gone up rapidly. If that is the case for multinationals, then it is clear that the entrepreneurial and flexible nature of retail trading firms will ensure full development cycles less than one year in length.
A dichotomy to Europe’s legacy approach to everything, Asia is one of demographic youth and the will to circumvent legacy bureaucracy and seek out modern means of business.
Political instability aspect in Asia has always been there. It is reported a lot more in the U.S. now because North Korea is getting a little bit more active, however it is possible to look at the conflicts between China and Philippines around the South China Sea and note that they have been persistent for the last five years. Looking similarly at the conflict between Japan and Philippines, they also have been persistent for the last five years, and likewise, China and Vietnam.
Political instability does not impact a lot of the regional executives who are sitting in Asia. Specifically it’s top of mind for a lot of senior executives who are not based in Asia, but people who live and breathe Asia see this as the reason why many young and highly educated traders are driven toward seeking out personal stability via retail multi asset trading with overseas companies and are as astute and competent in structuring their trading business as they are at circumventing the challenges that are foist upon them by their local circumstances.
Yes, this creates a very good quality base of clients, a huge ability to onboard introducing brokers that can bring clients to western firms and develop in-house expert advisors (EAs) that trade the accounts automatically to generate quick returns on rental income from vast real estate projects, but it also does not guarantee that a Western brokerage is able to adapt itself to cope with the requirements to succeed in Asia.
easyMarkets is one particular retail FX company that has approached and established itself in the Asia Pacific region at a level that has garnered it international recognition. The firm was the very first Western FX company to enter the Chinese retail FX market in the middle of the last decade, and continues to serve a very large and growing Asia Pacific client base.
Speaking today to Daniel Byrne, Managing Director of easyMarkets APAC division based in Sydney, Australia, FinanceFeeds looked at easyMarkets quiet but confident approach that has led it to acclaimed status.
Mr Byrne, who has 11 years of senior level FX industry experience, joined easyMarkets in May 2017 as COO, having spent two years as Executive Vice President at FXPLUS Trading Academy in Sydney.
Prior to that, Mr Byrne was Global Partnerships Manager for AxiTrader’s retail and institutional business, garnering a comprehensive understanding of the requirements of IBs in Asia, a region whose retail business is inexorably dependent on partnership relationships.
Four and a half years at GFT Markets between 2007 and 2011 in the firm’s pre-acquisition period was Mr Byrne’s inauguration, being responsible for premium client accounts that included high net worth individuals with multi-million dollar trading balances.
With regard to operating in Asia, Mr Byrne said “Forward planning combined with agility and adaptability to specific markets is key to your APAC expansion. To plan well, it is vital to prepare the perfect localization list, where you list everything that is needed in order to make your products strong in the new market. This includes the ‘juicier’ visible work of adapting features to your product that suit the interests of your new market and the more ‘behind-the-scenes’ invisible work, such as solutions that relate to your operations, hosting, payments and other vital structural components.”
Indeed, easyMarkets has done just that, with Mr Byrne explaining
“We are trading tool innovation leaders, our dealCancellation system being particularly important. This allows traders to effectively emulate the last look practices which are usually reserved for Tier 1 bank FX trading desks and creates a tremendous amount of trust in such markets, especially China. We also have a new product that we are about to launch called ‘easyTrade’ which is effectively ‘no margin trading’ on 30 minute, 3 hour or 6 hour options.”
In Asia, service and a ‘face to face’ approach is vital as the client base as well as its introducing broker network is dependent on actual relationships with electronic trading firms to the point of them visiting offices regularly, as well as brokers and liquidity providers visiting the offices of IBs and brokerages. Ergo, the business nature is far more offline than it is in the West, where in effect, the retail FX and multi-asset trading business is a completely online business.
“We are a “service-broker”, like the ‘stock-broker model’, we go further with servicing our clients to help them trade profitably with one on one market analysis and actionable daily trade ideas, personal dealing service, invitations to live trading events and important face to face customer seminars led by easyMarkets executives” said Mr Byrne.
“Our clients have rated us higher than any other broker in Trustpilot, including home grown competition in Australia such as ICMarkets and Pepperstone as well as British contenders with a large CFD and FX following that have strong bases in Australia” he said.
We are different to the typical ‘discount-broker’ model, where everyone says the same thing (tight spreads and fast execution). We are more about being the ‘Premium Service Offering, with innovative trading tools and the optimum trading conditions” explained Mr Byrne.
FinanceFeeds can concur that discount brokerage and a spread-based or IB commission-based race to the bottom does not work in Asia.
Contrary to many perspectives from the West, Asia Pacific-based brokerages and introducers that require retail brokerage services from Western partners rely on execution clarity, security of funds and relationship-based transparency as well as regulatory status and customer reviews for service rather than a churning nature and high IB commissions, largely because IBs in Asia are responsible for their client funds and therefore a P&L model or profit sharing from customer deposit represents a complete conflict of interest when operating on the B2B structure of IBs providing their client funds to western brokerages to trade.
ADVFN, a long established retail B2C FX trading website awarded easyMarkets the recent ‘best broker for Asia-Pacific region at the fourth annual ADVFN International Financial Awards for these reasons’.
When applying for selection, Mr Byrne explained that “We introduced what we believe to be an industry first: the ability to cancel open trades and get your money back, if the markets move against the trader within 60 minutes. For a small fee much like insurance, we gave our customers the ability to trade on events they would normally shy away from for fear of volatility.”
“This tool also takes away the fear new traders frequently feel when they open trades, allowing them a certain buffer to cancel their trades if they feel unsure. dealCancellation is also be an extremely innovative and beneficial tool for day traders, since it allows them to cancel trades that move against them due to unforeseen news, market sentiment or geopolitical events” – Daniel Byrne, Managing Director, APAC, easyMarkets
“easyMarkets has been offering financial services since 2001, since its inception it has strived to innovate and make trading accessible to everyone – and that was the founder’s main intent and motivation to create the company after a successful career in institutional level Forex brokerage. We were one of the first Forex brokers to offer both online trading and credit card funding. We were one of the first companies licensed by CySEC and acquired our ASIC license shortly after, when we launched our Australian office. Since then not only have we added to our roster of products, successfully offering CFDs and Options but that wasn’t enough – we wanted to offer our clients more and added bitcoin to our list of instruments in 2017” was Mr Byrne’s rationale for applying for accreditation.
“Beyond dealCancellation, we also offer fixed spreads and the promise that our spreads will never change, no matter what the upcoming macroeconomic events or current market volatility. In fact, we have never disabled trading or adjusted our spreads even during the Brexit referendum announcement, the French election or Japanese elections” said Mr Byrne.
When applying to the panel for selection for the ADVFN award, Mr Byrne explained “Innovative tools, industry leading customer support, exceptional trading conditions and amazing feedback from our clients is why we believe we should be considered as best broker of the APAC region.”
Indeed, careful consideration and well planned organic growth are vital additional methodologies to the firm standing of Australian regulatory licensing as springboards to Asia and actual success in Asia are clearly two different things.