Hong Kong is one of the most business-friendly countries in the world. Low personal income tax along with low corporate tax makes it an appealing proposition for companies looking to set up a financial service, or broker business there. English is widely spoken given its colonial past and the time zone of GMT +8 happens to fall between London and New York, the biggest financial centers in the world.
It is hard enough to produce a solid track record and to generate consistent profits as an FX trader, so why make it harder on yourself?
It’s my opinion that, for a long time, FX industry regulations were grossly inadequate, as the regulators seemed unprepared to protect its most vulnerable segment, the retail trader. When a novice trader opens a retail brokerage account, most, but not all, are unaware that their broker is on the other side of the trade and therefore 100% against them.
While crypto is starting to be a regular subject of discussion even amongst non crypto believers, the increased demand and interest in cryptocurrencies requires more computer power to verify transactions on the blockchain. Therefore an increasing need in crypto mining farms. But what is Crypto Mining and what challenges are in front of us ?
A Payment Processor is a company that acts as a kind of mediator between the bank and the merchant, in a transaction. The payment ecosystem is complex with different terms and processes to get used to. Today I’m going to discuss various terms used in the online payments and a simple guide to the entire payment process.
The Archegos story sounds awfully familiar to anyone in the financial industry.
A well-educated Wall Street professional who started a career at a traditional financial corporation, networked, moved on to launch their own hedge fund, made mistakes (insider trading), paid fines to the SEC (44mln) in 2012, banned by MMT from trading in HK for 4 years in 2014 (insider trading), and restarted afresh with a new company (Family Office) that didn’t have the limitations of the previous company (contrary to a hedge fund, family offices are not required to register with the Securities and Exchange Commission and file regular reports). Not to mention, founded and run a charitable organization that reported almost $500 mln in assets on 2018 tax forms.
Coinbase Global, Inc., known as Coinbase, is an American company that offers a cryptocurrency exchange platform and operates remotely - the first company of its kind without an official, physical headquarters. The company was founded in 2012 by Brian Armstrong and Fred Ehrsam from a $150K start up incubator.
As of March 2021, Coinbase was the largest cryptocurrency exchange in the United States by trading volume and has almost 43 million verified users. (almost 4 times that of Robinhood).
Banking and payment solutions for regulated FX Brokers are usually straightforward. I say "usually" as even FX brokers with recognized licenses can have a hard time finding suitable options in today's era of strict bank policies. Entry-level offshore FX brokers from St. Vincent, Marshall Islands and etc. are quite limited in how they can process incoming and outgoing payments, deposits and withdrawals.
This article will cover the most common payment solutions available for offshore FX Brokers as well as shed some light on what can be expected\ with each.
The spot Forex market has grown significantly from the early 2000s due, in part, to the influx of algorithmic platforms. The rapid proliferation of information, as reflected in market prices, can present multiple arbitrage opportunities. With the advent of MT4, retail traders gained an opportunity to trade the market algorithmically resulting in many investors getting involved in FX trading and hedging.
As the world is facing global pandemic fears, investors around the world are still scrambling to figure out how to re-distribute their portfolios to minimize losses and diversify their investments.
The year of 2018 announced the era when DDoS attacks exceeded 1 terabyte on an individual attack basis. The definition of a “DDoS” (Distributed Denial-of Service) attack is “a malicious attempt to disrupt normal traffic of a targeted server, service or network by overwhelming the target with a flood of internet traffic”. The most famous instance was the attack on GitHub that caused downtime of 15-20 minutes. Two days later, NETSCOUT Arbor confirmed a 1.7 Tbps DDoS attack but this one managed to fly under the radar as there were no reported service disruptions.
Topics: Traders, Industry Trends, FX Liquidity, Forex Brokerage, Start Your Own Forex Brokerage, SYOB, Forex B2B, Regulation, MiFID, MiFID2, Wholesale FX, FX Liquidity Provider, Retail Trader, Retail Broker, Institutional Trader, Institutional Broker, System Uptime
The inner workings of brokers have always been a mystery, a secret more closely guarded than the gates of hell it seems. That makes one wonder, why is it such a well-kept secret and what is there to hide? There are many underlying reasons:
Topics: Traders, Industry Trends, FX Liquidity, Forex Brokerage, Start Your Own Forex Brokerage, SYOB, Forex B2B, Regulation, MiFID, MiFID2, Wholesale FX, FX Liquidity Provider, Retail Trader, Retail Broker, Institutional Trader, Institutional Broker
Over the years, I’ve seen it all, the good, the bad and the ugly. I have tried to always keep my clients informed and have helped guide them along the way.
There have been a variety of responses, but in the end, my client knows that I am here to help and that I have their interests at heart. As far as new fund managers go, the reoccurring noticeable mistakes I have witnessed would be (in no particular order):
Advanced Markets is a company focused on bringing true Direct Market Access (DMA) liquidity, credit and technology solutions to the foreign exchange, energy, precious metals and CFD markets. Our firm has put together an international team of FX experts who are located all over the world. Our marketing team asked key members of this team to tell us a little more about their individual roles and responsibilities, the clients that the firm is servicing and their thoughts on how Advanced Markets is adapting to the fast changing FX landscape.
Topics: Traders, FX Liquidity, Platforms & Technology, Company, Thought Leadership, Forex Brokerage, Start Your Own Forex Brokerage, Brokerage, SYOB, FX Broker Startup, Forex Marketing, Wholesale FX, FX Technology Provider, FX Liquidity Provider, Institutional Trader, Institutional Broker
With high frequency trading estimated to account for more than 50% of the trading volume in the U.S. and more than 25% in Europe, the number of available price updates (ticks) per second has become an important criteria for FX Brokers, HFTs and Fund Managers when choosing a liquidity provider.
Topics: Traders, Platforms & Technology, Forex Brokerage, Start Your Own Forex Brokerage, Algo Trading, MT5, MT4, MetaTrader, Wholesale FX, FX Technology Provider, FX Liquidity Provider, Institutional Trader, Institutional Broker
Recently at an FX conference, a developing fund manager and I crossed paths. After a few polite introductions, I quickly realized that, based on his audited returns, the new fund manager was proficient in trading the FX market. The detailed description of the fund’s fundamental and technical trading strategies was welcoming to hear.
After a few routine questions from the prospective client, the topic promptly turned to spreads and liquidity (my favorite). The fund manager was comparing pricing between FX brokers and asked why spreads are so contrasting amidst all of the firms in question.
Topics: FX Liquidity, Thought Leadership, Forex Brokerage, Start Your Own Forex Brokerage, Brokerage, SYOB, FX Broker Startup, Forex B2B, Regulation, Wholesale FX, Institutional Trader, Institutional Broker
The European Securities and Markets Authority (ESMA) has implemented a range of measures intended to protect retail clients who are trading leveraged products, such as CFD’s.
The product intervention measures mandated by ESMA, under Article 40 of the Markets in Financial Instruments Regulation (MiFID II) include:
- Maximum leverage limits on the opening of a position by a retail client ranging from 30:1 down to 2:1.
- A margin closeout rule on a “per account” basis (at 50% of minimum required margin).
- Negative balance protection on a “per account” basis.
- A restriction on the incentives offered to trade CFDs.
- A standardised risk warning, including the percentage of losses on a CFD provider’s retail investor book.
- Prohibition on the marketing, distribution or sale of binary options.
Topics: Traders, FX Liquidity, Forex Brokerage, Start Your Own Forex Brokerage, SYOB, FX Broker Startup, Forex B2B, MiFID2, Wholesale FX, FX Liquidity Provider, Retail Trader, Retail Broker, Institutional Trader, Institutional Broker
2018 was a challenging year for retail FX brokerages with many of them being sold over the counter and others struggling to implement the new rules mandated by regulators.
What we can say is that 2018 was first and foremost a year of new regulation. Legal teams have been working hard to structure businesses differently and/or adapt to the new rules. Quiet contrary to the goals of the regulators’ goals, offshore is once more becoming the broker’s common strategy, especially to continue to offer high leverage to retail clients.
Generally, compared to the software industry where we are looking at average multiples of 21-25 times EBIDTA, M&A transactions in the retail FX broker space are showing multiples of 5-10 times EBIDTA at most for the best deals we have seen recently.
I thought it would be useful to compile a short list of the main differences found when trading OTC (over-the-counter) FX with an STP (Straight Through Processing / No Dealing Desk) “Prime of Prime” and a Retail brokerage.
The differences can be categorized as follows:- Vetting / Onboarding
- Netting vs Hedging
The global push for greater transparency in financial markets continues to gain traction with top tier regulators now requiring that all entities, engaged in trading financial markets, report their LEI (Legal Entity Identifier) number to regulatory repositories.
In the European Union, this process started as of January 3rd, 2018 as per MIFID 2. In Australia, in accordance with ASIC Corporations (Derivative Transaction Reporting Exemption) Instrument 2015/844, relief from the requirement to report the entity Identifiers ends on September 30, 2018, which means that starting from September 30, 2018, entities regulated in Australia will need to report LEI numbers for their corporate clients.
Topics: Traders, Forex Brokerage, Start Your Own Forex Brokerage, Brokerage, SYOB, FX Broker Startup, Regulation, MiFID, MiFID2, Retail Trader, Retail Broker, Institutional Trader, Institutional Broker
I’m sure there aren’t many industry peers who have managed to escape the MIFID 2 avalanche this past year and, perhaps only the frenzy surrounding crypto currencies, ICO and Bitcoin comes close to the boiling hot MIFID 2 topic in 2017.
For the better half of 2017, brokers and trading firms, falling under the reach of MIFID 2, were very busy implementing the parameters and protocol needed in order for them to comply with the new regulatory standards.
As January 3, 2018 approaches, FX industry participants are busy reading through the new financial laws of “Markets in Financial Instruments Directive” (MiFID 2) in an attempt to understand how these will affect them going forward.
Originally, MiFID was created following the 2008 financial crisis in an effort to standardize the regulatory disclosures for particular markets. MiFID 2 came along with a revised set of standards which will enforce transparency, enhance investor protection and expand reporting to regulators, effectively changing the way that Europe’s secondary markets function. The significance of these changes should not be underestimated as the regulatory expectations of higher quality data sets will most likely lead to more regulatory issues and fines.
by Natallia Hunik, Global Head of Sales at Advanced Markets & Fortex, Inc. and Ron Finberg, Head of Business Development at Cappitech.
MiFID II has been the focal point of many discussions in the European financial world recently. We have previously focused our attention on several of the main aspects of this upcoming regulation, such as Best Execution Policy, Reporting Framework Updates and Tied Agents Designation.
In this article, I would like to elaborate further on some of the reporting mechanisms that are being put in place by one of the world’s most respected financial regulators, the U.K’s Financial Conduct Authority (FCA).
MAM is an acronym for Multi Account Manager, a plugin originally designed for the Meta Trader 4 Platform to allow the proportional (or any set) profit and loss distribution from Fund Manager (or Master) to Investors (or Sub Accounts).
The Master Account serves as the primary (and the only real) trading account, and sub accounts receive the results of the actions performed on the Master Account (only proportional COPIES of the original trades).
Best execution policy under MiFID adopts a multi-faceted approach that addresses, amongst other things, quality of execution, trading conditions extended to clients and the counterparty selection process. It also provides directions and guidelines on how best execution can be achieved.
The execution policy, set forth in MiFID II rests on several main pillars and I will briefly describe my findings on these below.
Topics: Traders, FX Liquidity, Forex Brokerage, Start Your Own Forex Brokerage, Regulation, MiFID, MiFID2, FX Liquidity Provider, Retail Trader, Retail Broker, Institutional Trader, Institutional Broker
With the deadline for MiFID II implementation fast approaching, a lot of confusion and uncertainty still exists within the FX Industry.
MiFID II regulation is divided into several distinct rule sets with the legislation applying to a broad range of financial industry players, those who provide investment services, such as investment banks, portfolio managers and brokers, and intermediaries such as inter-dealer brokers and market-makers.
The main objective of MiFID II is to ensure the fair, effective and safe operation of financial markets. Failure to comply with the directive could result in significant fines.
The MetaTrader 4 Bridge is one of the most popular add-ons for MT4 Servers. It was created in early 2000 and, ever since then, there have been many rumors as to who actually developed the first commercial version (of course, many industry veterans know the name).
MetaTrader 5 bridges are now beginning to emerge, and the speed of their development is directly correlated with the very recent growth in MT5 adoption rates.
Welcome to a financial world, full of mysterious acronyms. LEI, CASS, ECP, EMIR, MiFIR, MTF, OTF… This industry just loves acronyms and MiFID II just gave us a whole lot of new ones to work with.
One that I have started hearing more often is the LEI number and it relates directly to the requirements embedded in the upcoming MiFID II directive. The following article will hopefully give answers to these much-asked questions, what is an LEI? Who needs one? Why it is required? How do I get one?
MiFID II, the “Markets in Financial Instruments Directive”, is legislation that is set to be implemented across the European Union on January 3rd, 2018.
As this due date approaches, many market participants are scrambling to implement changes to hopefully comply with the new rules. Some, on the other hand, prefer to procrastinate as long as possible in the hope of getting further clarity on this pending regulation.
Regardless, what is clear at this point is that there are a number of significant changes that are coming down the pipe for the FX brokerages.
Topics: Traders, Forex Brokerage, Prime of Prime, Start Your Own Forex Brokerage, Brokerage, SYOB, FX Broker Startup, Licensing, Regulation, STP, MiFID, MiFID2, Institutional Trader, Institutional Broker
While some industry sources are arguing whether or not MiFID II will dramatically affect the FX industry, most FCA and CySEC licensed FX brokers are rapidly adjusting policies in order to comply with the new requirements.
One of the key changes of MiFID II is an implementation of the term “best execution” and a directive to ensure “All Sufficient steps” (Article 64 -4) are in place to support that.