Trading industry stakeholders are constantly focused on emerging trends and growing markets globally. These monitoring, discussion, partnership, and development processes have rapidly increased in a global post-pandemic economic landscape. Notably, since 2020, major industry events have extended the list of countries they cover, companies have opened offices in new regions, and new local startups have emerged there.
In this article, we discuss the opportunities and obstacles that brokerages face when introducing their services in African, LATAM, and Southeast Asia countries.
What regions may we highlight as emerging markets?
In mid-2024, three key regions can be considered as emerging markets within the trading industry:
● AFRICA
South Africa, Nigeria, Kenya, and Zimbabwe;
● LATAM
Colombia, Mexico, Brazil, Chile, Peru, and Argentina;
● SOUTH EAST ASIA
Thailand and Vietnam;
All three in the past several years were the areas of ongoing expansion among global industry players and the places of increasing interest in brokerage services among the local population. This rising interest was complemented by the growing number of industry expos being held there. Their number will likely increase in the following years, attracting new brands, including liquidity providers, software developers, as well as marketing and other fintech experts.
Expert discussion
In order to form an informed and balanced opinion on the challenges that brokers may face when entering the African, LATAM, or SEA markets, Brokeree spoke with industry experts who are active in these regions.
During the discussion, Hardus Van Pletsen, CEO of QuickTrade, identified key obstacles brokers face while entering these markets.
Firstly, the local market may be dominated by one major trading service provider. This is particularly relevant for African countries. Even if a new broker entering the market manages to attract local audiences to open trading accounts with them, there is a high likelihood that traders will keep their main deposits with a well-established company in the market.
The next challenge is the volatility of broker-client relationships in the region. In the dynamically developing environment of these markets, brokers frequently face difficulties related to clients' and introducing broker (IB) intentions for a long-term partnership. Clients may switch from one broker to another for better trading conditions or more attractive bonuses. This continuous movement can present operational obstacles for brokers seeking to establish a stable presence in the area. Since client deposits can sometimes be modest, brokers must understand that these contributions may not always be enough to ensure the long-term success of their operations in a given country. This highlights the significance of building strong relationships based on trust and offering unique value propositions to retain clients and investment banks over the long term.
We asked other industry experts to complement this opinion with their insights by answering the question: What challenges do retail brokerages encounter when operating within the markets of Africa, LATAM, and SouthEast Asia?
“Retail brokerages face several challenges, including regulatory fragmentation, which can complicate compliance efforts across different countries. Infrastructure limitations, particularly in rural areas, pose barriers to consistent service delivery. Moreover, the relative lack of financial literacy among the general population necessitates greater investment in education and customer support,” said Ricardo A. Grados, Institutional sales LATAM at Finalto.
“I believe that the African region is mostly an untapped area that stakeholders should fully explore and develop rather than concentrating on the largely explored markets of several countries like Nigeria, South Africa, and Kenya,” said Jesse Waiganjo, Business Development Manager at Brokeree Solutions. “There are a lot of regions that are yet to set up a framework for the regulations, and I believe these regions provide a great opportunity for both new and existing brokers to explore new markets,” he continued.
Modern technologies mitigate infrastructure limitations and allow brokers to develop in parallel in several markets without operational contradictions. Some advanced solutions, like Brokeree’s Social Trading, extend trading platform abilities, allowing brokers to unite new audiences from new regions with their existing clientele base into a single pool of investors and signal providers. Thus, new clients from LATAM, Africa, Asia, Europe, and MENA could copy each other's signals in a few clicks.
“Given that a majority of the population in Africa has access to mobile phones rather than computers, brokers and other stakeholders aiming to enter the African market should prioritize developing mobile-friendly trading platforms. This approach will better cater to the needs and preferences of the local market, ensuring greater accessibility and engagement,” said Jesse Waiganjo, Business Development Manager at Brokeree Solutions.
Brokeree’s Social Trading has a mobile application with all the benefits of the desktop version.
‘In Southeast Asia, the forex trading industry is subject to a complex web of regulations, with each country enforcing its own set of rules to govern financial activities. <...> Brokers aiming to expand their business into Southeast Asian markets must navigate these regulatory landscapes diligently. Compliance is not just about adhering to the letter of the law; it's about understanding the spirit of these regulations – which is to foster a transparent, competitive, and resilient financial environment. <...> Moreover, as the region's financial markets integrate further, there's a growing emphasis on harmonizing regulations to facilitate cross-border trading activities. Brokers who proactively align their operations with these evolving regulatory expectations will be well-positioned to capitalize on the burgeoning opportunities in Southeast Asia's forex trading space,” said Nizwan Shah, CEO of Nine Solution.
“Retail brokerages such as TradingPRO encounter formidable challenges when operating in Africa, LATAM, and Southeast Asia. These regions present diverse regulatory landscapes, demanding meticulous compliance strategies to navigate effectively. Variations in market infrastructure and technological readiness require robust operational frameworks to ensure reliable trading platforms and data accessibility. Additionally, adapting customer support and educational initiatives to cater to varying levels of financial literacy and cultural diversity is crucial for building trust and engaging effectively with retail investors in these dynamic markets,” commented Fazril Izwan Nor Azmi, CEO of TradingPRO.
Local vs. Global
The emerging market audience is mostly unfamiliar with the services that have already become widespread in the regions with the developed online trading industry. The rising demand for brokerage services from local audiences involves a full spectrum of industry offerings: forex, copy trading & portfolio management, prop trading, trading with micro lots, etc. Brokers have an opportunity to meet this demand with their services, but they are rightfully concerned about several challenges.
Increasing attention and emerging opportunities entice local entrepreneurs to launch a startup to enter the brokerage industry with this rising trend. The challenge appears when these new companies face well-established players from the global industry in their markets. These brokerages with developed trading infrastructure and business development teams are also attracted to the same opportunities and look forward to introducing their offerings to new clientele.
International companies that enter new markets are likely to offer more attractive trading conditions to their new clients. Established companies have a more developed technical and operational infrastructure, which includes better liquidity management. To compete, local entrepreneurs can take advantage of their knowledge of the cultural specifics of the audience and use their physical presence in the region to establish more trustworthy relationships with potential clients. This proximity allows local brokers to create a more personalized offer and gain customer appreciation. As for the lack of experience in infrastructure issues, it may be covered by consulting industry experts, who can help them build effective technical processes and create competitive trading conditions.
What advice would you give to colleagues and clients?
To access new markets, expand product offerings, and share expertise, both emerging and established brokerages need to collaborate and form strategic partnerships with other companies, such as liquidity providers, software developers, and marketing agencies. Collaboration is the name of the game when establishing a presence in emerging markets as it combines the international expertise of leading industry experts with the client-centric approach of local companies.
We asked experts what advice they would give to colleagues and clients when introducing their services to new markets.
“You must play the long game to make money in Africa. Be prepared to build your brand in Africa for a period of 10 to 15 years before you become entrenched” – Hardus Van Pletsen, CEO of Quicktrade.
“Stakeholders should prioritize understanding and adapting to local cultural and economic contexts. Investing in financial literacy programs can build trust and foster long-term customer relationships. It’s also crucial to stay agile and innovative, leveraging local partnerships to navigate regulatory environments and infrastructure challenges effectively” – Ricardo A. Grados, Institutional sales LATAM at Finalto.
“My advice to colleagues and clients looking to introduce services in Africa is to conduct thorough market research to understand the specific needs of each target country. This research will enable them to tailor their offerings to meet the unique demands of each market” – Jesse Waiganjo, Business Development Manager at Brokeree Solutions.
“To effectively introduce the services to new markets, colleagues and clients should begin by meticulously researching market dynamics, including consumer behaviors, regulatory landscapes, and competitive analyses. It's imperative to tailor offerings to resonate with local preferences and needs, demonstrating a deep understanding and respect for cultural differences. Establishing strong local partnerships and investing in targeted marketing campaigns will help build credibility and foster relationships within the new market. Finally, maintaining agility and responsiveness to market feedback ensures continuous adaptation and sustainable growth in unfamiliar territories” – Fazril Izwan Nor Azmi, CEO of TradingPRO.
