Asia’s retail FX market is booming. Despite challenges from cryptocurrencies, FX trading products have attracted a new generation of traders in the last few years due to the liquidity they offer. So, what is driving the growth across the Asian FX market? Is it only pandemic-driven? Is it sustainable?
Finance Magnates recently interviewed Marc Despallieres, Chief Strategy and Trading Officer at Vantage, and asked him about key aspects of Asia’s retail FX market and Vantage’s growth strategy. According to Marc, the global pandemic and the rise of social trading have been instrumental in the growing popularity of FX trading among young Asian investors.
1. Hello Marc, please introduce yourself and tell us about your role at Vantage?
I am Marc Despallieres, the Chief Strategy & Trading Officer at Vantage. I joined Vantage in August 2019.
I have been involved in the trading industry since the mid-1980s, formerly as an independent trader on the French Futures exchange, trading on the floor until the end of the open outcry market. I moved into electronic trading in 1999, where I was among the first independent traders using a revolutionary technology for online trading. You could say I was one of the guinea pigs of electronic trading.
My role as the CSO is to understand how the market is changing, how our clients’ needs are changing, and adapting Vantage’s short- and long-term strategic expansion initiatives to the new business landscape, in both emerging and developed markets.
Trading is a new portfolio that was recently added, which allows me to oversee and support our global trading teams. This new appointment taps into my 30 years of experience in the financial services industry, where I have been connecting banks, brokers and professional traders, to the most advanced technology, liquidity, brokerage infrastructure, clearing and services in the market for institutional trading.
Without a doubt, my past experience has helped me better understand our customers, how we can improve our interactions with them, and how our business should be run.
2. The retail FX market in Asia is growing, what are the key drivers behind the recent growth?
As a reputable and regulated broker, we have always found word-of-mouth referrals to be the most effective growth engine in our business. But, this is hardly the only key driver.
The global pandemic of 2020 has been instrumental in the growth we are seeing in Asia and across the globe. The unprecedented lockdowns caused Asian traders to move their trading activities online and on mobile.
Coupled with the rise of social media and copy trading (or social trading), this has accelerated the trend among novice and younger traders to seek investing and trading advice from social media influencers.
Furthermore, in light of the current geopolitical uncertainties, including the Russia-Ukraine war, central banks’ tightened monetary policy, and soaring inflation, volatility has risen to an all-time high. Such heightened volatility has drawn more risk-tolerant traders seeking the right market opportunities to trade, including crypto markets.
3. For Vantage, what were the best performing regional markets in 2021?
Here at Vantage, we’ve observed a positive momentum across all our key global markets, like Australia, the UK and APAC regions. We are also seeing exponential growth in the MENA region. The biggest jump occurred after we launched our new strategy to transform ourselves from an Australia-centric forex-focused firm to a global multi-asset broker.
In November 2021, we made the conscious decision to remove FX from our name, repositioning our company vision to equip traders of all levels with world-class trading solutions in the financial markets.
With that change, we took the opportunity to create a thriving trading ecosystem for our clients, which provides access to a global network of connections, markets, tools, platforms, educational materials and the customer service they need in order to succeed.
4. How has the sentiment of retail FX investors in Asia changed in the past few years?
For some years now, we have observed a new generation of traders who are young and hungry to invest. These traders are often wealthier and more business-savvy than their predecessors and more discerning about their trading needs.
We also realized that the existing brokerage landscape in many Asian markets was not serving local needs; while there are a number of smaller local brokerages and a handful of international firms, they rarely had local teams or even provided local language services. We have sought to resolve those issues with our global operations.
At the same time, on a global level, our offering remains competitive in terms of spread and the range of products and tools we provide to our retail clients and introducing brokers.
In particular, we’ve found our mobile-friendly trading tools to be particularly attractive in emerging markets where many clients have leapfrogged legacy technology straight to mobile phones.
I was pleasantly surprised when Vantage received the 'Best Trading Services Provider APAC' award at the ADVFN International Financial Awards 2022. We couldn’t have asked for better validation for our effort in the APAC region than this.
5. What sort of challenges/opportunities have emerged for the FX market after the growing popularity of cryptocurrencies in Asia?
It is pretty clear within the last year, that crypto has become more widely accepted than ever before. The combined market capitalization of digital currencies has reached giddying heights of over $3 trillion, due in part to the geopolitical uncertainties I highlighted earlier.
In the short term, we do not expect to see a significant waning in demand for crypto trading. That said, while this may take some heat off the retail FX trading market, it is unlikely to dent the demand for the latter.
Many traders still trade FX for the higher liquidity it offers, particularly among the majors, compared with cryptos. While volatility is already high in FX trading, it is inherently more unpredictable in crypto trading. Furthermore, crypto remains elusive to regulators, though crypto trades can be conducted as a financial instrument like CFDs, and facilitated by a regulated broker.
Crucially, the younger generation of traders that are more accustomed to crypto trading, has a radically different philosophy to previous generations. They hold different views on marketing, communication and money. They believe in ESG, in responsible and ethical investing, and they also expect constant innovation because they have grown up in a world of rapid change.
Being able to understand and adapt to these young traders allows us to better cater our product offering to their needs, while adequately addressing the trading risks involved. This is also why we have expanded our Crypto CFDs to over 30 cryptocurrencies, with more to be added in time to come.
