The emerging markets conundrum: To follow the crowd, or to build entirely from scratch? – Live from Peru


Peru, a nation rich in history, nestling between the famous Andean mountain range to its east, and the Pacific Ocean to its west, is a nation which has until now, not been synonymous with online investment, or the use of technology by retail customers to manage their portfolios.

There are several reasons for this, two main ones being Peru’s continual efforts to develop a bourgeois layer within its society, and another being the lack of priority displayed toward cultivating an FX industry in Latin American nations with emerging and rapidly developing economies such as Mexico, Peru, Colombia and Chile, instead the Far East having remained the focus of many firms.

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To develop a Latin American market would require a complete construction of the retail FX industry from the ground up, which is an expensive, labor intensive and long-term project, however from its base in Peru, one company has begun to take its part in the development of a retail FX industry across the entirety of Latin America, which, with assistance in the form of a partnership with an FX brokerage that has had tremendous success in China.

In order to investigate this maverick move into uncharted and potentially fruitful territory, LeapRate spoke to the senior figures who are setting this in place at a conference in Lima, the Peruvian capital city.

Dignified and detailed

Held at the exclusive and highly luxurious Business Tower Hotel in Lima’s upscale San Isidro district, Tutores FX, the Peruvian company which provides edcuation to retail traders in Latin America, held an educational seminar concentrating on how to master a retail trading platform.

Over 100 delegates participated, all of whom were middle class, aged between 30 and 45, and, unlike the vast majority of the FX industry and its customers, consisted of an interesting mix of male and female.

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In nations with a developed FX industry, a common view is that training provided by independent companies is of questionable reputability, largely due to aggressive sales techniques which often involve selling highly expensive and unproven trading software, and placing novice traders with unregulated FX brokerages whilst acting as an introducing broker without divulging to clients, and then taking a profit and loss based commission.

In Latin America, things are somewhat different. The advocates of education are actually the FX brokerages and those entering the region, as they view it as an essential means of bringing a viable, long-term business to the region.

At this year’s FXIC in Mexico City in February, LeapRate discussed with a series of senior executives from well renowned British and American prime brokerages and liquidity providers, what they saw as important for growth in this region, with unanimous emphasis on education.

Latin American nations which have secured their economies and begun to garner a larger middle class population are home to highly educated and astute people, many of whom are looking to manage their own investments electronically.

For these reasons, educational methods in Latin America are highly technical, not at all sales focused and appeal to a very urbane demographic, who expect knowledge from those with proven track records in the industry, a facet that was very apparent at the seminar yesterday in Lima.

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The seminar commenced with Omar Barrientos, Chief of Treasury at ICBC Bank of China in Lima, who concurred that the potential for online trading in Peru is vast due to the nation’s growing middle class population who are highly edcuated and can master trading, and are looking for modern, self-managed methods of growing their capital.

This is interesting, as it is a far cry from how many newly established retail FX brokerages entered other emerging markets 5 years ago, especially in unregulated emerging regions such as the Middle East and Asia Pacific regions. Many operated a profit and loss model, and had a short-term approach, which did substantial damage to the reputation of the industry in Western markets, subsequently requiring an entire overhaul of the modus operandi.

With today’s highly reputable FX industry now well established in other regions, entry to Latin America with such a model would mean that the FX companies establishing business in the region would benefit from a good and proper operation model from the very outset.

Mr. Barrientos demonstrated the technical functionality of the retail FX trading platform. Contrary to many training seminars of the past, which are often held by small companies with little provenance and contain very little content, this was professionally delivered and did not patronize the delegates in the way that some Western market trainers have been known to do in the past.

Mr. Barrientos openly used a demo account which he showed clearly to the delegates, and did not look for account openings as an introducing broker, he has a senior position in a bank. Most certainly, gone are the days of baiting customers with bonuses and pressure selling.

Delegates actively took detailed notes with regard to the functionality of the platform, and there was no focus on any bogus strategies.

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Next up was Daniel Ruiz, CEO of Tutores FX, who explained the methodology of the company that he established and its long-term view of engendering a sustainable FX industry in Latin America via educational means.

Mr. Ruiz spoke exclusively to LeapRate to explain clearly how this should take place. “Our mission since we started has been to deliver education to all of Latin America mainly via online webinars.”

“Partnering with BMFN to work in this project to educate the people is a concept in which we will support and help all traders by giving them our resources. The main goal is that the people increase their knowlodge in this field and not all brokers have this vision to invest this much time and resources into education” explained Mr. Ruiz.

LeapRate’s Andrew Saks-McLeod demonstrated the importance of empowering traders via the use of online industry sources, explaining that “LeapRate provides the industry with the statistics, corporate information, and news relating to the entire business sector from brokerages, to platform providers, ancillary software firms and liquidity companies.”

“The information that we produce is used by senior executives across the entire global FX industry in order to assist them in forming their commercial decisions, therefore by reading LeapRate as well as education resources, an entire knowledge of the industry from the inside will be imparted into traders.”

Nurturing the retail client

BMFN is the first retail FX firm to go directly into Latin America and is charged with not only attracting a client base, but establishing an entire industry from the ground up, building on the firm’s initial large scale entry into China, a region where it now has 4,500 partners. Mr. Ruiz detailed its partnership with Tutores FX in which traders in any Latin American nation will get 3 months training with Tutores FX.

Luis Sanchez, CEO of BMFN explained to LeapRate’s Andrew Saks-McLeod at the seminar “As I mentioned during the discussion panel at FXIC n México in February, I strongly believe that in order to penetrate and delevop succesfully this region, education is a must and a key element.”

“BMFN is providing complete trading courses,daily webinars,educational tutorials and now starting physical seminars like this one in Lima, all at no cost. This is essential in building a structure for the future of the industry and its customers” concluded Mr. Sanchez.

Mr. Sanchez then addressed the delegates on matters including regulation and the laws relating to brokerages in different jurisdictions, how to choose a broker, how to check for additional costs, where the custodian bank is, and how to ensure that a broker of choice provides enough personal attention to customers.

Attendees of the seminar were very keen to share their perspectives with LeapRate, some of whom had steered successful businesses and were looking for investment opportunities, others which consider the FX industry as a viable means to shrewd, independent investing.

One particular attendee, Janet Heller, explained to LeapRate “I am impressed by the way this particular seminar was conducted and the way the information was delivered to us by professionals with senior positions in the global financial sector. I have spoken to some other guests this evening and we share this common feeling. I hope this will method will continue.”

Photographs: Top Right: 100 delegates being addressed by senior industry executives in Lima, Peru. Center Left: Tutores FX CEO Daniel Ruiz. Center Right: BMFN CEO Luis Sanchez. Lower left: Leaprate’s Andrew Saks-McLeod. Featured: Downtown Lima, Peru.

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The emerging markets conundrum: To follow the crowd, or to build entirely from scratch? - Live from Peru

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