Jeffrey Siu, ATFX Group COO and Wei Qiang Zhang, ATFX (UK) Managing Director join LeapRate today to discuss key demands from traders, regulation and new rules, retail, 2020 expectations and more.
LR: Compared to 2018, how successful was 2019 for ATFX – what has changed, what would you like to leave behind?
Jeffrey: I’d honestly say that 2019 was extremely successful for ATFX compared to 2018. We launched lots of new products and services for our clients; participated in the major events around Europe and developed a professional education service to our clients.
One of the major highlights for the year was the launch of ATFX Connect, our bespoke institutional service, which so far, has been very well-received. We’re continuing with this approach into 2020 with a focus on products that set us apart from our competitors. We’ve listened to our clients and will be releasing more products and services this year.
LR: What were the key demands from traders in 2019?
Wei: We uncovered two main sets of demands from the traders on our platform last year. The first is that both retail and professional traders want the best services available and it’s our job to deliver products and services that surpass their expectations. The second was from professional traders looking for institutional services, which helped us identify significant demand from brokers, hedge funds, and other proprietary traders.
ATFX launched several educational services that cover an array of topics for our clients. The Forex Education Centre continues to grow as our team of experts create lots of videos and eBooks to help our clients’ learning.
We also launched ATFX Connect, a bespoke service for professional traders, and we’re pleased to say it’s been widely well-received.
On top of that, we’ve opened offices in various countries, employing local people. This is important because they understand their respective markets and can easily connect with our clients in those areas.
LR: How could ATFX (Retail) and ATFX Connect (Institutional) influence the market in 2020?
Wei: Both ATFX and ATFX Connect will continue to transform the forex trading industry by providing technology-led, innovative tools to our clients. We plan to launch several new products and education services that address gaps in the market. The Forex industry is hugely competitive and we plan to distinguish ourselves by speaking directly to clients and offering tailor-made solutions. We intend to continue in our upward trajectory this year by delivering to both institutional and retail traders.
LR: How important is education and where does it stand in your company?
Jeffrey: ATFX believes that education is the single most important tool to transform someone into a successful trader. Education allows traders to understand the inherent risk present in the financial markets and how to manage their risk exposure by making informed decisions.
We want to make sure our clients are equipped with the right knowledge to trade and is why we’ve developed our education centre. We also partner with high-end service providers including Trading Central who give our clients the best research available. Our plan is to keep investing in education for our traders, and to further expand the reach and depth of our in-person training seminars and workshops.
LR: What has changed for the retail trading industry in 2019, and what do you expect in 2020?
Jeffrey: A major challenge we saw in 2019 was that this was the first full year in which ESMA’s new leverage rules were in effect. Together with rule changes of other regulators, the industry is no less busy adapting to extra scrutiny from authorities this year.
Also, we’ve noticed that the retail trading industry has shifted towards more personalised services. They’re demanding more from brokers, they want the ‘full package’. Innovative technology products that were once reserved for institutional traders, like machine learning trading strategies that use sentiment analysis are now in the product line.
We noticed that brokers who only allow deposits via card payments are facing difficulties due to the tightening up of Visa and Mastercard Scheme policies. ATFX has integrated our payment services with multiple payment providers (especially non-card payments) to serve our clients better. Our clients in different regions can now deposit and withdraw their funds via local payment services available in their countries. We will continue to introduce more trading products and services in line with client needs.
Going forward in 2020, we continue to see radical changes like ones mentioned above. We’ve adapted to this shift by increasing the number of deposit options available and offering customer service in multiple languages. We’ve launched several next-generation technologies as part of our services offering such as biometric verification and e-sign. Additional plans include the introduction of more products and services based on changes we’re noticing and you’ll be hearing about them soon.
LR: What upcoming trends do you see emerging and making an impact on the industry in the next few years?
Jeffrey: A major trend that is emerging in the industry is the fact that a lot of our business is coming from emerging and developing markets. With the exception of the US, many other developed markets are saturated with brokers, especially in Europe. Emerging markets, particularly in Asia and Africa, are underserved and this presents a great opportunity for us. Brokers should venture into these markets and create products tailored to meet the needs of traders in these regions. ATFX already has operations in some emerging markets and plans to open offices in many more later this year.
Brokers will also have to create innovative products and services to appeal to traders. Having that cutting edge will really pay dividends when it comes to standing out and attracting more clients. The retail brokerage industry is changing, the introduction of leverage caps by regulators are steps to protect retail traders. Lower liquidity in the markets has seen many brokers report lower revenues and profits. This has created yet more competition for new clients in order to boost revenues.
LR: How will Brexit affect the retail trading industry?
Wei: We don’t expect Brexit to have a major impact on the retail trading market but it will clearly impact both currencies, the EUR and GBP. If anything, volatility will attract new investors to the markets and could help grow the market. We expect both the EU and UK to be well prepared for Brexit in terms of structure as large clearing houses have set up cross-border arrangements. Therefore, we expect the clearing of derivatives to continue as usual given regulators have been working on arrangements since 2017.
LR: What is the biggest opportunity you see for SMEs in 2020 and what is one tip that you have for businesses to pursue it?
Jeffrey: SMEs should factor in foreign exchange risk when forecasting especially given the global nature of business. Considerations should be made about how you pay suppliers in different countries or receive payments in another currency. Partnering with brokers like ATFX Connect who offer bespoke FX services to SMEs will ensure they always get the best rate. These partnerships will protect them from spikes in currency markets because they can hedge their risk through us.
LR: What role will exchanges play in the evolution of the FX market?
Jeffrey: FX and CFD brokers offer over-the-counter trading products to their customers. This is the nature of the industry and we continue to see it this way in the near future.
Of course there are overlaps of product features. Robinhood or the trading service of Revolut is making stock trading much easier for retail investors; leveraged ETFs, exchange traded warrants issued over stock indices and commodities offer very similar trading features to CFD trading.
As a Forex and CFD broker, we are also closely following evolving financial innovations like “smart contracts”, which will blur the boundary between OTC and exchange trading. We’re confident that we’ll continue to provide new products that our clients love. Our client first approach helps us identify exactly what they want in a product or service.
LR: Any marketing strategy tips for 2020?
Jeffrey: Well, I can’t reveal exactly what ATFX is planning, but I believe the adage “customer is king,” is the best marketing advice for any business in 2020. With all the technological changes in the last decade and the wealth of information available, businesses that want to win in long-term competition have to be focused on their clients. The retail trading industry is shifting and understanding our own customers will continue to give us a significant advantage.