FX is very much an online business.
Japan’s vast electronic trading powerhouses exemplify this, as they not only account for between 30% and 40% of all global FX order flow, but also they conduct the entire business of client acquisition, engagement and retention online, to a predominantly domestic Japanese audience, with very little interaction by telephone.
This highly successful model has stood some of the retail FX giants out as providers of the largest trading volumes in the world, GMO CLICK being no exception, as the firm reported a $1.2 trillion volume in January, a record monthly figure for any retail FX broker since dawn of the concept.
GMO CLICK has taken some interesting steps recently in evolving even further, by taking the unusual step of looking overseas as the firm established presence in London this month, offering its proprietary platform under its newly unveiled Z.com Trade brand, which just last week embarked on a liquidity partnership between London’s LMAX Exchange and bridge provider PrimeXM.
A particularly interesting move by GMO CLICK was to purchase one of only three single-letter domain names that exist on the entire world wide web – Z.com – for $6.8 million from Nissan Motor Company late last year. This has been the subject of discussion of many experts, at a time in which the entire FX industry is focusing on website redesign and online positioning,
LeapRate has discussed these very poignant matters which are of current industry importance with Tomitaka Ishimura, CEO of GMO-Z.com Trade UK Limited in great detail.
Nowadays there is more of a focus on domain names and website design than ever in all online businesses. GMO Internet Inc.’s purchasing of Z.com puts it among only 2 other companies worldwide to have a 3 letter TLD, but at a huge cost. How do you view the potential return on investment for paying $6.8 million for a domain name compared to using traditional digital marketing campaigns?
The GMO Internet Group comprises of many internet-facing businesses, and with our knowledge of this space, we believe that the potential benefits in terms of generating brand awareness and effectiveness of digital marketing campaigns by having a memorable domain are a huge asset, and far greater than the scale of investment.
The Z.com domain is shared throughout the group, and the combination of the services under this one domain will allow to us to cross-sell to the overall user base, and combine the strengths of the group as a whole to improve the usability and quality of our services.
The Japanese FX industry is very domestic market orientated, therefore a foray into London is interesting. What will GMO CLICK achieve from this and will Western customers’ requirements align with a firm which operates in a region where manual trading is prominent and where MT4 is almost non-existent?
Z.com Trade offers MT4, FIX API, and our in-house developed trading platform, and will continue to evolve the technology to the needs of our prospective customers in Europe. However, we believe our platform is already very user-centric and easy to use, creating a customized and seamless trading experience.
This makes it appealing to traders with all levels of experience, including beginners who appreciate the simplicity when they first start trading. Our platform offers ways to trade and conditions that are different to MT4, and we feel that by offering the two, we are able to cover a wider range of the trading audience.
We are confident that our partnership with LMAX Exchange and PrimeXM will enable us to provide a strong MT4 offering too, giving traders the option to trade in the environment which meets their needs the most.
How will GMO CLICK focus on R&D for markets outside of Japan where customer requirements and market conditions change rapidly, compared to the very structured Japanese commercial environment?
Z.com Trade is an engineering-led company with nearly 50% of its team dedicated to IT, and the flexibility of our technology and structure in adapting to changes in market are the foundation of our success in generating the largest FX trading volumes in the world. We have a very lean and fast development operation which is ready to adapt as required, and we look forward to offering our technology to a new market with different requirements and needs.
Japan’s very loyal home market client base accounts for around 30% to 40% of all retail FX order flow globally, and GMO CLICK has regularly experienced monthly trading volumes in excess of $1 trillion, starting this year with $1.2 trillion, an all time record for a retail FX broker, all in the domestic market, which is familiar and known to GMO CLICK. With this success in the local market, what is the need to go abroad and seek business in a new market which is already saturated with FX firms, all of which only complete a fraction of GMO CLICK’s Japanese volumes.
Japan is a very developed, mature market with an intense level of competition as well, and GMO CLICK is a leader in the industry there.
The volumes we generate in Japan alone have allowed us to achieve these record figures; however the company’s long-term vision is to firmly establish its position as the world’s leading forex provider outside of our own domestic market. As the major financial centre for forex trading,
London was the ideal location for the next stage of our global expansion, after the establishment of our entities in Hong Kong in recent years. An impressive 36% of global FX transactions take place in London already, and we believe the strength of our status as an FCA regulated firm will attract a global audience throughout Europe.
What ancillary services with London’s Z.com Trade offer and which traders will use its proprietary platform? Bearing in mind that this is totally new to a western audience, will it compete more with NetDania’s NetStation aimed at professional traders, or is it an alternative to mainstream retail platforms? If the latter, how can those used to such retail platforms see the advantages of Z.com Trade’s proprietary platform?
The GMO CLICK Group’s core values are to provide high-quality trading technology at as low a trading cost as possible to investors, and our London entity is no exception. The Z.com Trader platforms are aimed at both retail and higher end professional traders, and we believe both groups will see merit in trading with the world’s largest FX brokerage using technology that has been at the forefront of the market in such a competitive environment as that of Japan.
Our aggressive pricing model has been successful in driving success in domestic market, and we place a huge amount of importance in leveraging our high-quality liquidity sources to keep trading costs as low as possible – in a market such as Europe where fixed spreads are not the norm, we believe our service will provide a trading experience like no other, and the satisfaction of investors will be at the core of Z.com Trade as we develop our business further.
·Once established, what is the plan for the year ahead for Z.com Trade’s London operations?
In the medium term, we are planning to add more languages and region-specific instruments to our trading platform, and build on the functionalities offered in our mobile trading apps. Keeping traders’ trading cost as low as possible and our technology simple-to-use will be at the heart of all of our development plans in the coming months, and we will work to improve even further on the conditions and technology we currently offer.