LeapRate's Daily Forex Industry Newsletter
Join now to receive first access to our EXCLUSIVE reports and updates.
Screenshot of a breaking news alert e-mail from Q2 2017
Taking a large scale, online industry which has rapidly expanded from its origins in Western Europe and North America into vastly populated areas of the developing world with huge success is nowadays not a feat to be taken lightly.
The retail FX industry spread across the globe into the Asia Pacific region, with newly established brokerages gaining ground in their hundreds, focusing on China from their bases in Australia, Britain, Canada and of course Cyprus.
Today, the FX industry is one of the largest and most technologically advanced ecommerce enterprises in the entire world, its borderless nature and appeal to the burgeoning middle classes in the Far East, Russia, the Arabian gulf and Southern Europe having fueled dramatic rises in volumes over recent years.
But what about establishing this industry in a continent which has many nations with rising economic prowess, and yet very little FX industry?
The advantages of this would be that an entirely new client base, which all speaks one language, and resides in several countries, with populations willing to take control of their own portfolios and manage them via global, electronic methods, and very little market saturation or competition.
However, installing this highly advanced business with its many layers, components and facets into an uncharted continent requires careful planning and consideration in order to succeed. For this reason, the pioneering companies and entities committed to developing retail FX in Latin America are ensuring that the correct level of support and education is available to allcomers, provided by senior banking officials and industry experts; a far cry from the variable levels of education and support in developed markets.
Today, in Lima, Peru, LeapRate spoke to Omar Barrientos, Chief of Treasury at the Industrial and Commercial Bank of China (ICBC Bank)’s Peruvian enterprise which is based in the city’s upscale San Isidro financial district.
Mr. Barrientos has committed himself to the development of the retail FX business in the Latin American region, taking a long-term view to nurturing the business on an ethical basis, combining his experience as a senior banking executive with the modernity of the electronic trading world in order to impart knowledge into traders via regular seminars at venues across the region, and daily webinars in conjunction with global FX brokerage BMFN and Tutores FX.
Mr. Barrientos has most certainly a proven and elevated career, holding the position of Chief of Treasury at a large Chinese bank that is prominent in the Peruvian banking sector. He has a Masters degree in Finance , Bachelors degree in Industrial Engineering, and is a Senior Investment Professional Member of the CFA Society in Peru , with over 14 years experience in Investment, Finance, Treasury, Money Market, Capital Markets, Risk Management and Corporate Banking . He continues his professional certifications on an ongoing basis, having passed the Level II of the CFA and is currently a candidate for CFA III.
“My management in various front office business has been successful” Mr. Barrientos explained to LeapRate’s Andrew Saks-McLeod. “I have achieved a profit around of 100% from my budget within different banks of the Peruvian financial system in which I have worked, including my current responsibility at ICBC Peru Bank, Banco Interamericano de Finanzas, Banco de la Nación, Banco Central de Reserva del Peru and Banco de Crédito.
When asked by LeapRate how he is committed to the growth of the Latin American retail FX industry, as well as being Head of Treasury for a large bank, Mr. Barrientos explained “I have personally participated in this industry as an investor since 2005, with excellent results combined with some bad results, but on average I have had good gains.”
“I hope to continue in the banking industry and simultaneously be present in the retail FX industry as a private investor and as a teacher for people in Latin America wish to know of the financial markets and to see the range of opportunities that today’s world offers so choose the option that best suits your needs and risk profile” he said.
In developed markets, the quality and reputability of some trainers has been somewhat infra dig, therefore LeapRate asked Mr. Barrientos whether professionals who give webinars and education to traders must have a proven track record, for example a standing as a senior bank executive, as necessary career experience in order to ensure that the astute investors receive good information and are able to trust the person providing it. Mr. Barrientos elaborated on this and how it is important in Latin America.
“Having had the opportunity to manage institutional positions does not guarantee success in the retail financial markets but I think it is important to pass on my experience to the investor not only know the theory that you can find in books or on the web, but also part share my personal experience in the markets” said Mr. Barrientos.
Latin America is a vast and varied region, and some statistics regarding current levels of business in Latin America’s leading countries such as Mexico, Peru, and Chile are vital in order to understand the potential for an FX firm wishing to enter the region, as well as to gauge the enthusiasm for trading among those who want to take their own finances and manage them is like.
Furthermore, statistics with regard to what it entails in order for an FX firm to enter this market and make a success of it are of great importance to future market participants.
Mr. Barrientos provided a series of statistics and stated that “According to the InterAmerican Development Bank (IDB ) from 2005 to 2014, the Peruvian middle class quintupled, ie increased from 11.9 % of the population in 2005 (3.2 million people) to 50.6 % of the 2014 population (15.8 million people) . Peru has about 30 million inhabitants.”
“This study is based on the economic security approach, which encompasses people who earn between US $10 and US $50 per day, or monthly family income from PEN (Peruvian Nuevo Sol) 1,880 up to PEN 10,900, bearing in mind that the exchange rate in Peru is 3.15 PEN to 1 USD).”
“Moreover, if the economy grows at a rate of 4% annually, it is expected in about 10 years to consolidate the emerging class and middle class, therefore the middle class would increase even more in size and financial stability” stated Mr. Barrientos.
“Some international consultants such as Wealth X, which specializes in asset management for high surpluses argue that there are 470 people with more than $30 million of liquid assets in Peru. In Latin America the numbers of people with higher wealth than USD 30 million are estimated at 4,725 in Brazil, 2,900 in Mexico, 1,050 in Argentina, and 900 in Colombia.”
“For these reasons, many offices that manage large estates have emerged in South America, especially in Peru and it is estimated that these organizations total some 15 companies in Peru” explained Mr. Barrientos.
“In Chile the firm speculates that there are over 500 family offices, which manage more than 10% over the US $1.000 million. On the other hand according to the Banking Regulator of Peru, The Superintendency of Banking and Insurance (SBS), the number of Peruvians with savings of more than PEN 1 Million totaled 4,768, up 10% from 2003. The reasons for this increase were the higher volume of mergers and acquisitions that occurred in all sizes of business last year and the sale of properties, which boost the liquidity of families.”
Bearing in mind Mr. Barrientos’ depth of knowledge, LeapRate asked what Latin American clients look for when considering retail online trading, how is business conducted and what the business environment is generally like in leading Latin American nations.
Mr. Barrientos provided his inside view on this matter. “In South America in recent years we have seen some brokers offering trading platforms, mainly located in Chile, Uruguay and Argentina. Now with the entry to the entire continental Latin American market by BMFN, supply is specializing and I think the industry has great growth potential because people each day are becoming more professional in managing their finances and want to manage it themselves, in order to obtain better returns compared to existing alternatives and save some of the fees charged by fund managers.”
In conclusion, Mr. Barrientos is, along with the several industry participants that joined him at a live FX Seminar at the exclusive BTH Hotel in Lima this week, very enthusiastic about the future growth in Latin America. “For the reasons set out above on the evolution of the middle class and wealth in South America, as well as the vast number of people seeking new investment alternatives, I believe that in this region there is a high potential for exponential growth of retail FX industry.”
Photographs: Featured: Omar Barrientos; Top Right; Omar Barrientos reveals all to LeapRate’s Andrew Saks-McLeod; Lower Left: BMFN CEO Luis Sanchez and Omar Barrientos