Broker Profile: AvaTrade

A Brief History

AvaTrade was founded way back in 2006 and originally traded under the AvaFX name. The brokerage however re-branded itself in 2013, as AvaTrade in part to reflect the wide range of instruments available to trade with the brokerage. The brokerage is regulated in a number of different jurisdictions with the firm having imprints based in Ireland, Australia and an offshore arm of the company based in the British Virgin Islands (Source). The brokerage is well known among traders and has one of the larger Forex affiliate programs which is responsible for driving a substantial amount of business to the firm. In 2013, the firm received some negative press for releasing a series of adverts which were criticised as being deeply sexiest. Despite moves in the industry towards STP/ECN models the brokerage still operates as a Market Maker.

Services

The name change from AvaFX to AvaTrade highlights the increased ranges of trading instruments offered to the firms clientele, while the core of the business is still focused on FX trading. In addition to a wide selection of FX pairings the brokerage also offers Precious Metal, Indice, Bitcoin, Stock, Bond and Commodity CFD’s.  This is quite a substantial range of CFD’s for a brokerage to offer with many other brokerages sticking more to their core FX offering.  The brokerage offers both fixed and floating spread accounts, though the firm has been criticised for the width of their spreads by many who have traded with them. At the core of the brokerages platform offering is their AvaTrader which is available as both a web trader and as downloadable client, however the brokerage also offer clients the ever popular MetaTrader 4 platform should they prefer. Social trading is also supported and available via both ZuluTrade and Tradency’s Mirror Trader. As already briefly touched upon AvaTrade began offering Options Trading to its clients in 2013, through a partnership with Sentry. The options offer aren’t Binary, but rather vanilla options as one would find traded on an exchange (Source). 

Regulatory Information

AvaTrade operates a number of imprints meaning that it is regulated in a number of different jurisdictions. In Europe, the brokerage is regulated in Ireland by the Central Bank of Ireland, this allows the firm to accept clients from throughout the European Union via MiFID’s outbound passporting. The Australian arm of the firm is regulated by ASIC allowing the firm to accept clients from Australia, additionally AvaTrade has an imprint based and regulated in Japan allowing the firm to take on clients from the lucrative country. The brokerage also operates an offshore entity which is regulated by the British Virgin Island’s light touch regulator the Financial Services Commission. Many firms have started such offshore entities allowing them to take on clients from regions which would require them to open a local office and gain regulation.

Broker Profile: InstaForex

Company History

InstaForex was initially launched all the way back in 2007 and has been online since 2008. The brokerages main offices are based in the Russian Federation, but the brokerage is incorporated offshore in the Seychelles. The brokerage has a relatively limited profile in Europe, with the company paying particular attention to attracting business from Russia and South East Asia. The firm operates unregulated and has been in a number of scrapes with global regulators. Despite a number of issues the brokerage continues to operate and has a relatively large customer base.

Services

As the name suggests InstaForex is primarily focused on FX trading, with the brokerage offering a total of 107 currency pairings of which 60 can be considered exotic. This a huge range of currency pairings for a firm to offer, the wide range of pairings is in part due to the fact that the brokerage operates as a Market Maker.  In addition to offering spot FX pairings, the brokerage also offers a range of other markets, with clients being able to trade Precious Metals, Stock and Indice Contracts-for-Difference (CFD’s). However the firm has garnered a lot of attention for the prohibitive trading conditions, with the brokerage placing a levy on profits made from trades placed during news announcements. Additionally, the brokerage forbids scalping and will remove profits from scalping related activity from client accounts. This has led to the broker being rather infamous with many and some have speculated the brokerage operates as a pure bucket shop.

The brokerage offers client the chance to trade using both the MetaTrader 4 & 5 platforms from MetaQuotes. The MetaTrader platform is by far the most popular trading platform among retail traders and by offering both versions of the platform, the broker has been able to attract customers from many emerging markets.  

Regulatory Information

The brokerage is registered in the offshore jurisdiction of the Seychelles but has its main offices in the Russian Federation. As you may neither jurisdiction has a regulatory regime for the provision of the over-the-counter financial services, which means many FX brokerages based in Russia become members of Self-Regulatory-Organisations. These SRO’s set out requirements by which their members must abide, but do not provide any significant regulatory oversight. InstaForex is a member of RAFMM and Finotrebsoyuz, both Russian SRO’s which set out standards for their members. It is important to note these organisations provide little if any regulatory protection. 

The brokerage has had a number of scrapes with regulators. In 2013, the Bulgarian Financial Supervision Commission released a public warning against the InstaForex and their Bulgarian subsidiary Insta Sofia. This is due to the fact that the firm was operating within Bulgaria without being regulated within a European Economic Area country, thus they were in breach of European financial services regulation. In 2011, the CTFC fined InstaForex a $140,000 for soliciting US clients without being regulated by the appropriate authorities.

Saxo Bank improves its FX offering

Danish broker and investment specialist Saxo Bank has announced that it has made a number of improvements to Forex offering. These improvements are meant ‘to better accommodate the needs of its global client base’ and as you would expect these improvements are focused at those in emerging markets or regions where there is plenty of growth for the FX industry. 

The major addition to Saxo’s FX offering is the introduction of two new currency crosess or pairings, with the brokerage adding both the EUR/HRK and the USD/HRK to their trading platform. This makes them (as far as I know) the first retail brokerage to offer Croatian crosses, something which will certainly be attractive to traders based in Eastern Europe. The Croatian Kuna has become to get more attention since the country entered into the European Union on the 1^st of July 2013, while Croatia is obliged to join the Eurozone at some point in the future there will be plenty of speculation to occur regarding the future of Kuna.  

The broker also went onto announce that since the 2^nd of January 2014, the brokerage had halved the spread on the USD/THB to 25 pips. The move was in part inspired by the greater volatility of the currency which has led many in South East Asia to follow economic news out of the country with a great deal of attention. In addition Saxo have stated that there has been significant demand from their clients in the region to provide a competitive offering on the currency pairing with many local traders keen to get their hands dirty trading the exotic FX pairing.  

The moves made by Saxo Bank highlight how brokerages are increasingly looking to emerging markets to continue their growth. The provision of products which appeal to those based in these countries is surely likely to help brokerages like Saxo Bank develop a strong presence in these strategically important regions.

Broker Profile: ForexTime (FXTM)

A Brief History 

ForexTime often referred to as FXTM is a relatively new brokerage on the scene having only launched in 2013. This is not to say that the team in charge of the brokerage is not deeply experienced with the brokerage being launched by Andrey Dashin an executive and major shareholder at internationally renowned Forex broker Alpari. The launch of ForexTime came after Alpari consolidated its Western European operations, concentrating on the FCA regulated imprint of the firm, this led to many members of staff at Alpari CY joining FXTM. In 2013, FXTM has been working hard on breaking into the very crowded Forex market place and has some success with its no dealing desk offerings.

Services  

As the name suggests FXTM is heavily geared towards Forex trading, with currency trading making up the core of the company’s revenue. The brokerage offers a total of 60 currency pairings on its platform, allowing individuals to trade major, minor and exotic pairings.  FXTM offers an array of accounts with the brokerage offering both Dealing Desk and ECN accounts. Of particular interest will be the Amanah (Islamic) trading account which is Sharia compliant, with traders sharing profits with the brokerage to make up for the lost overnight charges. The full range of accounts on offer can be found at the brokers website.  

In addition to offering FX pairings the brokerage also offers a range of CFD’s. For those who don’t know, CFD’s are a form of financial derivatives which allow individuals to speculate on financial instruments without owning the underlying asset. FXTM offers a range of CFD’s for a range of markets with it being possible to trade Stocks, ETF’s, Indices, Commodities and Precious Metals all on the FXTM platform. This means traders can speculate on a range of market all in one platform.

When it comes to trading platforms, FXTM relies heavily on the MT4 & MT5 platforms from MetaQuotes. The brokerage offers the Web, PC and Mac versions of both MT4 & MT5, ensuring that those who want to use the MetaTrader platform are able to do so, no matter what their computing options are. Additionally, FXTM offers the mobile and tablet versions of the MetaTrader platform which are available in all the major important formats. Those who love MetaTrader are sure to love the platform offering from FXTM, but those who aren’t keen on MT4 & 5 may want to look elsewhere. 

In 2015, the brokerage began offering a specialised PAMM service looking to directly compete with brokerages offering social trading service. Fund managers were first to be vetted by the brokerage and then could offer their trading signals to clients of the firm and receive commission in exchange.

Regulatory Information

ForexTime gained a CySEC licence in 2012, before eventually launching properly in February of 2013. This means that FXTM has always been a regulated company and doesn’t have any shady past to speak of. As Cyprus is a member of the EU and European Economic Area, the brokerage is able to offer it services to those who live in European Economic Area countries via MiFID’s outbound passporting. The brokerage has a completely clean regulatory record and has never been disciplined by CySEC during its time as regulated brokerage.

Sources

http://forexmagnates.com/founder-of-alpari-andrey-dashin-launches-a-new-forex-brand-forextime/

http://fx-today.com/forex-broker-reviews/forextime-fxtm-review/ 

http://www.forextime.com/

Broker Profile: UFXMarkets

UFXMarkets was launched back in 2009, but was at this time unregulated and traded as UFXBank. The firm soon wound up on a number of financial regulators warning lists due to soliciting business in countries where they weren’t regulated. In 2011, this all changed when UFX gained CySEC regulation and changed its operating name to UFXMarkets. The firm has continued to operate today under this name and due to its status as a regulated CySEC firm has not appeared on any European regulators warning lists.

Services  

UFXMarkets primary offering is Forex with the brokerage offering a total of 32 different pairings. The brokerage offers fixed spreads on all currency pairings with the spread on the EUR/USD pairing being fixed at 4 pips for those using a Micro/Mini account. In addition to offering currencies pairings, those who use UFXMarkets are able to trade a range of other instruments via Contracts-for-Difference. At the moment the brokerage offers Commodity, Indice and Stock CFD’s. All spreads are again fixed and can be found at the brokerages website.

When it comes to platforms, the brokerage offers the ParagonEX platform as standard which is available as a web based and mobile version. ParagonEX is a turn-key solution used by a number of FX brokerages and Binary Option firms, which has charting functionality built in. Individuals are able to trade all the firms instruments via the ParagonEX trader which is at the centre of the UFXMarkets offering. The firm does offer MetaTrader 4 from MetaQuotes, however the MT4 platform is only available to those who have a Platinum account with the brokerage. Which is an interesting business decision as the majority of brokerages offer MT4 as standard, while UFXMarkets require that individuals make a minimum deposit of $10,000 to the use the platform.

Regulatory Information

UFXMarkets is a trading name of Reliantco Investments Ltd., who are a regulated Cypriot Investment Firm having gained full CySEC regulation sometime in 2011. With Cyprus being a member of the European Economic Area, UFXMarkets are able to take on clients from throughout the European Economic Area via MiFID’s outbound passporting. The brokerage made industry headlines for the wrong reasons when in 2013, it reached a settlement with CySEC for 100,000 Euros. This settlement saw the brokerage admit no wrongdoing and according to the firm was due “Company’s disproportionate high growth rate compared to its increase in personnel.” The firm went on to say that “In an effort to satisfy CySEC’s requirement the Company shall continue to expand its team of global financial experts at an increasing rate specifically at its Cyprus head office.” Despite the fact that the firm were not required to admit any wrongdoing the settlement definitely had a negative impact on the firm’s reputation.

Sources

http://www.amf-france.org/technique/multimedia?docId=workspace://SpacesStore/426a5dc0-eb5d-40bb-b175-1c07752367d4_en_1.0_rendition

http://www.ufxmarkets.com/

http://forexmagnates.com/cysec-announces-a-settlement-with-reliantco-ufx-markets/

FBS joins Russian CRFIN

Russian Forex broker FBS has recently announced that it has been granted membership of Russia’s most prestigious self-regulating organization (SRO) CRFIN. The organisation aims to bring the provision of FX services into the Russian regulatory framework, which means CRFIN acts as a industry lobby in addition to its role outlining rules to its member brokers. Membership in the CRFIN self-regulating organisation is held by the vast majority of the country’s leading FX brokerages, who have been pushing for more regulatory recognition.

FBS has been around for over ten years now and is among the Russian brokerage firms who have been particularly active in bring FX services to Africa and South-East Asia. Without any serious domestic competition these brokerages were seen as providing a superior level of service, despite offering spreads which would be considered wide by some industry standards. FBS concentrated on expansion into South-East Asian markets in particular Indonesia, where they became known as an early entrant having created a number of localized products specifically for the Indonesian market.

Recently FBS and other firms have been having a much harder time in Indonesia and south-east Asia in general with local regulators clamping down on the operation of FX brokerages. This has led to some local regulators to clamp down or totally ban Forex trading. For instance, Malaysia’s Central Bank (MAS) issued a ban on foreign FX brokers, while India’s Reserve Bank has directed banks to prohibit credit transactions with Forex companies. Indonesia has taken things a step further by restricting access to a number of FXbrokerages and portals, which has created a strong negative bias against European firms despite the IP ban being possible to circumvent by using VPN’s and proxies. FBS decision to join CRFIN, will add a degree of credibility to the brand when operating in these South-East Asian territories. 

CRFIN pushes for Russian Regulation

The CRFIN has been the most vocal lobby group for creating a regulatory framework for the regulation of FX services in Russia. Despite the fact that Russia is a significant market in terms of volume up to this present time there has been no government regulation overseeing the provision of FX services. CRFIN has had some limited success in pushing the case for the government regulation of Foreign exchange services with the Minister of Finance recognizing the important role played by self-regulatory organizations and in addition to this the state Duma read a bill proposing a regulatory framework to govern the provision of FX services. Despite these minor successes Forex regulation in Russia looks some way off.

Investment Trends Report on the state of the UK derivatives market

Investment Trends, an Australian wealth management and research organisation has recently released a report about the current state of the UK derivatives market looking at CFD, Spread Betting and Forex trading. The study was based on a sample of over 13,000 British investors with data being collected during the months of August and September. 

Low Volatility During 2013 Suppressed Trading Volume

The study estimated that around 82,000 Brits had used financial Spread betting during the past year before September 2013. These figures show a net decrease of 8% on July 2012, when it was estimated that 92,000 British residents had engaged in financial spread betting during the past year. This meant that 2013 was the first year since 2009 when the size of the UK Spread betting market decreased in size, this was due to a decrease in the number of new traders while the amount dormant accounts remained the same.  

When it came to CFD trading there was an even greater contraction with the number of active CFD traders decreasing from 25,000 to around the 21,000 mark. Taking into account both Spread betting and CFD’s that means around 100,000 British individuals use derivatives to trade the financial markets, making the UK the biggest market place in the whole of Europe. 

When it came to FX trading there was a much more modest contraction with a decrease of only 3% in terms of the number of active traders. Meaning that in September 2013 there was around 71,000 people actively trading the Foreign exchange markets. It should be noted that currently in the UK, the vast majority of traders use Spread betting and CFD’s to speculate on the FX markets, however increasingly traders are turning to leveraged FX products.

The contraction in the number of traders using FX, Financial Spread Bets and CFD’s was blamed on the lack of market volatility and the consistent strong performance of the FTSE100 and FTSE250 saw many traders turn to traditional share trading. Equity heavy CFD firms came out the worst effected with brokerages leaning towards FX fairing much better.

IG Markets dominates the UK Markets

The report also found that IG Markets still dominates the UK market being the top FX/CFD and Financial Spread betting firm. According to the report IG Markets lost some market share when it came to FX and Spread betting, with the firm increasing its dominance in the provision of CFDs.

Both FXCM and Alpari saw some growth of their FX market share, the report also briefly mentioned that FXCM was gaining market share quickly in a number of other countries analyzed by Investment Trends. Interestingly Plus500 became a major player in the UK CFD market taking 5% of the countries market share which is quite impressive considering that the broker wasn’t featured at all in last year’s Investment Trends report.

The full results of the survey can be found below: 

Top 5 FX Providers	Market Share Jul' 12	Market Share Sept' 13
IG	32	29
FXCM	8	9
Alpari	6	8
ETX Capital	6	6
CMC Markets	4	4