CFD’s have been available to retail customers in the UK since the early 90’s, however it took much longer for CFD’s to be introduced in Australia. Early on CFD’s were favored as a way for hedge funds and investors to hedge their trades cheaply and efficiently. However as the 90’s progressed it became clear that Contracts for Difference had huge potential as an over-the-counter instrument. However it wasn’t until 2002 that Aussies could trade contracts for difference, since their introduction Contracts for difference have become increasingly popular. With the Australian Stock Exchange offering 50 exchange traded Contract for differences on the 50 biggest Aussie Stocks. These Exchange traded CFD’s haven’t stopped the big CFD providers from thriving in the Australian market with many of the big names being British based companies.
Recently, a number of providers have acquired ASIC (including FSA regulated Plus500) licences to both take advantage of the growing Australian market and as a way to gain a presence in the Oceania/Pacific area. All of this has been occurring against the backdrop of increased regulation. In order to legally accept Australian clients a Contract for difference provider must be regulated by ASIC. ASIC is short for the Australian Securities and Investment Commission who are responsible for regulating securities and investment in Australia. In mid 2012 ASIC announced new tougher regulation for those providing over the counter instruments to put ASIC regulation on par with British and Singaporean financial regulation. These changes have to be implemented by the 31st of January 2013.
ASIC is also the regulator for other financial services, not necessarily binary options or CFD brokers. For instance, ASIC regulate commercial foreign exchange firms that provide FX hedging options (these firms don’t allow speculative trading for the purpose of profit, but rather focus on international payments). You can read about payment providers in Australia here.
The main changes to the regulation include increased capital requirements and greater liquidity requirements. The idea is to protect Australian citizens from being victims of another MF Global etc. This has be to a step in the right direction and will certainly reassure those who have already deposited money with an ASIC regulated broker or those who are planning to do so. It appears that ASIC may have found the right mix between being tough and avoiding driving away business.
The Australian CFD market is likely to continue to grow for several years and these new regulatory guidelines bring Australia closer into line with general international over the counter financial regulation.
Social trading has been a huge growth area in the past couple of years with a number of brokerages offering significant social trading features and others such as eToro building their entire business around Social Trading. So it something of a shock that OANDA has decided enough is enough and pulled its social trading platform less than a year after its launch.
OANDA’s social trading platform fxUnity, was one of the few platforms in the industry to be powered by proprietary technology with the majority of brokerages opting for a third party solution such as FXJunction. However OANDA’s FxUnity platform hasn’t been particularly popular and has received some pretty stringent criticism from those who have used the platform.
Traders using the fxUnity platform have been requested to close all open positions by 5pm on the 8th of March 2013. All trades that remain open at that time will be automatically closed by OANDA. All funds deposited with the fxUnity platform can be either withdrawn or transferred to a standard OANDA account.
There has been no comment from OANDA whether this marks the end of social trading at OANDA in general or whether OANDA will seek a third party solution. The number of competing social trading networks out there in the market place at the current time makes it very difficult for a new social trading network to reach the critical mass needed to really take off.
Today FxPro has made a move to consolidate their Forex business by shutting down their Australian office. The office only opened a year ago and half ago but FxPro have made the decision to shut down operations those attempting to open new accounts at FxPro.com.au are greeted with the following message:
Clients are then directed over to FxPro.com. FxPro has been a center of much activity recently after some of it’s minor shareholders sold up to an undisclosed investment group. So far main management and shareholders have remained in place, though a number of high profile staff members have left including James Marshall former head of the PR department at FxPro.
FxPro is not the only Forex brokerage to have consolidated recently with a number of other major companies having consolidated global offices and let go staff. This consolidation was partly due to the low trading volumes experienced throughout 2012 which may have forced brokerages such as Saxo Bank, Oanda, GFT and MB Trading to consolidate their global operations. 2013 looks like it may be much better for Forex brokerages with trading volumes having been very promising in both January and February.
Whether we see further consolidation by the major industry players in the coming months remains to be seen.
It was only a few years ago when the Gaming industry was making some of the big sports sponsorship deals. It now seems that Sport Sponsorship has garnered significant attention from a number of FX and OTC financial instrument providers. Earlier this month Alpari announced a multi year multi million pound deal to become the Shirt sponsor of Premier League team West Ham United. Alpari have always been a big fan of Sport sponsorship having also sponsored the New York Nets and Knicks.
Alpari aren’t alone in targeting big name sports sponsorship’s; FSA regulated brokerage FX Pro has been the proud Sponsor of Fulham FC since 2011. FX Pro’s deal with Fulham runs out at the end of the 2012/13 Season. However that particular deal is only one part of FXPro’s Sports Sponsorship package with FXPro also being the main sponsor of the Asian Champions League as well as being the naming rights partner of the Australian Super League Rugby. In addition to these current sponsorship agreements FXPro previously had various sponsorship agreements with a number of different bodies and organisations in the world of Motor Sport.
Sports sponsorship seems to make a lot of sense for FX companies, just as it does to those in the gaming industry. Sport Sponsorship reaches a predominately male audience (Forex products are predominately used by Males). Plus there seems to be a sense in which Sports fans are both competitive and less risk averse than many of their peers. A number of different sports have been the primary targets for those wanting to advertise Foreign exchange products and each for distinct reasons.
- Football: Premier League football in particular has been a target for the FX Industry. Not only do such advertisements reach a large audience in Europe, they also gain great exposure in Asia which is a rapidly expanding market for those offering Foreign Exchange services.
- Motor Sports: Motor Sports and Formula 1 in particular have been targeted as well. Motor Sport has a global fan base as well as attracting a clientele with above average disposable income.
- Sailing: Some Forex companies have very cleverly chosen to provide sponsorship for Sailing teams and events. Those who follow Sailing again tend to have more disposable income as well as a greater interest financial products.
How long the Forex Sport Sponsorship bonanza will continue for remains to be seen. For instance the Gaming industry became a major sponsor of competitive sport a few years ago, however the period of massive Sports gaming sponsorship appears to be over. While there are still a number of Gaming companies heavily involved in Sports Sponsorship they number appears to be down from the peak. It appears that Sports Sponsorship may be an effective way for FX companies to attract new customers for the foreseeable future.
Here at Made To Trade, we have already covered the emergence of a couple financially regulated Binary Options platforms and it now appears that a third player is going to enter the marketplace following the likes of TopOption and Banc De Binary. Yesterday Cypriot financial regulator announced that they were authorizing six different firms Cypriot Investment Firm licences. Possibly the most interesting firm included on the list is Ouroboros Derivatives Trading Ltd.
While there is not much information to be found online regarding the firm, a quick Google of ‘Ouroboros Derivatives Trading Ltd.’ will lead you to the Linkedin profile of Eran Chertok-Gorodezky who is listed as the CEO of the said company. According to his profile:
“Ouroboros Derivatives Trading Limited is the first Cyprus Investment Firm (“CIF”) to receive a license from the Cyprus Securities & Exchange Commission (“CySEC”) on the bases of providing binary options trading (license number 187/12). The company will be offering binary options trading to EU clients.”
This however is not strictly true with it being Banc De Binary who became the first firm licensed by CySEC on the basis of providing online Binary Options. It should also be pointed out the Safecap Investments Ltd. (best known for their Markets.com brand) have possessed a regulated Binary Options platform since mid December.
It is not clear whether Ouroboros Derivatives Trading Limited. currently operate a Binary Options platform or whether one will be established in the coming months. Searches for CEO Eran Chertok-Gorodezky do not turn up much, but do suggest some limited links to Israel whether this is the case still remains to be seen.
Since CySEC regulated Binary Options in early May 2012, a number of Binary Option firms have become regulated in the jurisdiction of Cyprus including S.O SpotOption Ltd. the biggest Binary Options platform provider. In January 2013, Banc De Binary became the first Binary Options provider to be regulated on the basis of solely providing Binary Options to EU customers. Currently CySEC are the only European financial regulator to recognize non-exchange traded Binary Options as a financial product, with Binary Options being classed as a form of gambling in a number of different jurisdictions (e.g Malta). It seems unlikely that other European financial regulators will follow CySEC in regulating Binary Options as a type of financial instrument.
Back in December we announced that Alpari (AFS) Ltd. had moved its customer base to Alpari’s UK arm. There was speculation that this was due to the fact that Alpari’s biggest shareholder Andrey Dashin was planning launch a new CySEC based Forex brokerage. This speculation seems to be right as CySEC announced today that Forex Time Ltd. (ForexTime) had acquired a full CySEC Investment Firm licence.
The offering from ForexTime does look pretty exciting, it appears that while Forex is not the only offering at FXTM it will make up the core of the offering. With ForexTime planning to also offer Spot Metals, Commodity Future CFD’s, ETF CFD’s and Share CFD’s. This makes for a pretty decent range of instruments for prospective traders. While this is a pretty decent range of instruments, what excites me the most is the range of ETF’s available for trade. I feel that ETF’s offer traders some great opportunities. At the present time the range of ETF’s at FXTM is pretty limited but hopefully FXTM work on adding extra ETF’s as time passes.
I have no doubt that FXTM will go on to be a successful company being backed by Alpari’s main Shareholder will sure help. But it appears that everything at FXTM is being done very professionally with their already being a very professional website up. FXTM also supports both MetaTrader 4 & 5, with support for social network ZuluTrade being added soon.
All in all, FXTM looks to be an exciting venture that I feel will fare well in the ultra competitive over-the-counter Forex market. Expect to see a review in the upcoming days.
UBK Markets who have recently acquired a full CySEC investment firm licence, is a new start up currently in beta mode. The brokerage has been founded by the Russian Forex entrepreneurs who currently operate a couple of automated trading products (namely FXMarketWave.com and GeleanTrawler). You may have not heard of these programs due to the fact that they are largely marketed towards the Russian Language market.
It appears that the FXMarketWave program will play an important part of the new brokerage, with the program advertised on the front page of the UBK Markets beta test website. The FXMarketWave program is a technical analysis which relies heavily on Elliot Wave Theory. While Wave Theory isn’t widely popular in Western Europe the technique is widely used by a variety of successful Russian traders.
The idea behind the brokerage appears to be to provide a Forex trading environment which caters strongly to the desires and wishes of the average retail trader in Russia. Whether UBK Markets is a successful venture will largely depend on whether it can get a hold in the CIS Market which is currently dominated by Alpari. Alpari’s Russian operation currently accounts for 50-60% of the Over-the-counter Forex volume in the CIS Countries.
If UBK Markets comes up with a solution which is attractive to Russian consumers there is no reason why they can’t capture a share of this lucrative marketplace. We will keep you up to date with going on’s at UBK Markets and inform are readers if they ever provide English language support.
HF Markets (Europe) Ltd. better known as HotForex, appears to have been granted a CySEC licence meaning they have become a MiFID regulated brokerage. This move sees HotForex add to it’s rather weak FSC regulation with regulation from a far better known regulatory body. It appears that HotForex were just using their FSC Regulation as a temporary stop gap solution. HotForex, has come a long way since it was founded as a totally unregulated Foreign exchange brokerage.
HotForex has worked hard at growing it’s customer base by providing some of the tighter spreads on the major Forex pairings out there. This substantial growth is likely the reason why they have been able to raise the required capital needed to acquire a CySEC licence. Many Forex companies begin live as unregulated entities in order to acquire the necessary capital to open a brokerage in a European jurisdiction. I can think of a number of other Contract for Difference providers who have taken a similar route to that of HotForex.
It is however not clear whether HotForex intends to open a new European regulated arm of their business or simply transfer its complete client base over to it’s CySEC regulated company. This ambiguity is due to the fact that HotForex has not yet updated it’s website to include the new regulatory information. One would assume such an update would be completed as soon as the deal had gone through, as it appears to be something that HotForex would want to boast about.
It may be that HotForex needs to prepare and change it’s systems in order to operate in a way that is fully compliant with CySEC regulation. We will keep you updated in regards to the situation surrounding HotForex’s newly gained MiFID regulation.
Social trading is one of the Forex Industries fastest growing products, therefore it is unsurprising to see a number of new Social Trading products being launched. A new player has entered into the field of social trading going by the name of ForexGlobes.
This start up is broker independent and earns it’s revenue in the same way as ZuluTrade namely by sharing revenue with its supported brokerages. This means that traders who wish to use the ForexGlobes social trading platform will have to sign up with one of their supported brokerages. At the moment the list of supported brokerages is pretty small and in no way compares to the wide range of different brokerages offered by big name competitor ZuluTrade. However a number of well known brokerages are supported by the ForexGlobes platform including FXCM and AVA FX. However, ForexGlobes have claimed they purposefully limited the number of supported brokerages to ensure that they can maintain a strong relationship with the said brokerages. I don’t quite see it this way as I know many traders greatly value the wide choice of brokerages offered with
According to ForexGlobes founder Eliav Kordova the company intends to differentiate itself due its so called ‘technological advancements’. What is meant by this is that ForexGlobes is server based solution installed directly onto the partner broker’s hardware. The advantage of this is that it provides greater connectivity which should help ensure traders experience lower latency, minimal slippage and fewer failed trades. Whether this will be the case in practice is still to be seen.
Another claimed advantage of the ForexGlobes social trading platform is the simplicity of the interface with all the key social trading features being available form the dashboard. Which acts a bit like a Facebook news feed, such a feed is similar to the feed on the dashboard of the eToro trading platform. Allowing traders to see other traders profiles and giving them the option to follow or just copy that particular trade. A nice feature is that traders can elect to only copy a particular traders trades in a selected instrument. For instance I have quite a good track record trading Oil, however my record isn’t quite as impressive with certain Forex pairings. ForexGlobes would give you the ability to only copy my trades in Oil ignoring my riskier currency trades. This a pretty cool feature and could see many people using such a feature.
In addition to the main dashboard there are additional separate pages available which feature information on economic news, trading headlines and various charts all powered by TradingView. These add on’s are designed to give traders a full social trading experience and do add some value to the platform while not being inspirational. The product is fairly easy to use and anyone who has used Social trading platforms before will be able to get to grips with ForexGlobes in no time.
The real quality of a Social Trading network is really dependent on the the signal providers found on the particular network. At the moment the social network is very lightly populated and there’s not a wide selection of signal providers. At the moment the platform is still in Beta which means traders can go open a demo account and try out the system, with Live brokerage support being added soon.
I strongly recommend that traders try out the network while it’s in the Beta period and see if its worth there time and effort.
Admiral Markets has launched the 2013 Forexball after the success of the initial 2012 Forex ball. However this time the prize pool has been raised from $70,000 to a massive $541,000, each participant in the competition will be given a $10,000 demo account to trade with at no risk at all. Each round begins on Monday at 10am and finishing at 2pm GMT Friday, there are prizes to be had for each round and for the total season winners.
This year Admiral Markets have introduced a number of social features including a Forexball community where traders can view each others profiles, checking traders history and connect with them. As well as a dedicated forum for the competition where traders can discuss strategies and share information with one another.
While the social features are pretty cool what people are going to be more interested in is the no risk cash prizes on offer. The 2013 Forexball offers a total prize fund in excess of half a million dollars with the competition being divided into five divisions: Europe, Russia and CIS Latin America, Asia, and Rest of the World. Three cash prizes will be given to the best traders in each division, there is a further $96,000 to be distributed among the traders with the best seasonal results regardless of division, with the most profitable traders of each season receiving $5,000, $2,000 and $1,000 respectively. The prizes on offer at the Admiral Markets 2013 Forexball are great with there being plenty of opportunity for traders to earn good prize money.
Registration is totally free and all trading is carried out on the Admiral Markets demo platform. Not only does the Forexball give the opportunity for traders to earn impressive cash prizes it also gives traders the chance to try out the Admiral Markets platform. The main reason why these brokerages such competitions with the goal of getting positive press and attract new customers.
Registration can be completed at Forexball and is completely free. I will be competing will you be? A more detailed run down of the competition and its features can be found at the Admiral Markets website.