"They're Encroaching on Our Space": Pepperstone's CEO Warns of CFD Crypto Exchange Threat

Pepperstone is witnessing a significant increase in cryptocurrency trading among new clients, while its CEO expresses concerns about competition from crypto exchanges entering the CFD space.

Tamas Szabo shared his insights on the evolving dynamics of the financial services sector during an interview with Jonathan Fine at the Finance Magnates London Summit 2024 (FMLS:24).

Cryptocurrencies on the Rise

Szabo expressed astonishment at the limited crypto adoption by brokers, as evidenced during a panel discussion on market structure.

“One of the panelists asked the audience how many were involved in crypto, and very few hands went up,” Szabo noted. “It’s such an important asset class. If you’re not doing it, you should seriously consider it.”

Cryptocurrency has emerged as Pepperstone's fourth-largest asset class, with a notable uptick in first-time traders choosing crypto as their initial trading instrument. This trend has accelerated particularly following recent market developments, including Bitcoin Bitcoin While some may still be wondering what is Bitcoin, who created Bitcoin, or how does Bitcoin work, one thing is certain: Bitcoin has changed the world.No one can remain indifferent to this revolutionary, decentralized, digital asset nor to its blockchain technology.In fact, we’ve gone a long way ever since a Florida resident Laszlo Hanyecz made BTC’s first official commercial transaction with a real company by trading 10,000 Bitcoins for 2 pizzas at his local Papa John’s.One could now argue that While some may still be wondering what is Bitcoin, who created Bitcoin, or how does Bitcoin work, one thing is certain: Bitcoin has changed the world.No one can remain indifferent to this revolutionary, decentralized, digital asset nor to its blockchain technology.In fact, we’ve gone a long way ever since a Florida resident Laszlo Hanyecz made BTC’s first official commercial transaction with a real company by trading 10,000 Bitcoins for 2 pizzas at his local Papa John’s.One could now argue that Read this Term's rise to the $100,000.

“Tracking the first asset class traded is crucial—it shows intent, even if it doesn’t match the overall asset breakdown,” the Pepperstone's CEO said.

In a separate conversation with Finance Magnates, Pepperstone revealed that the total value of newly opened Bitcoin CFD positions surged by over 300% in the first two weeks of November compared to the same period in October. This spike was driven by the U.S. presidential election.

Szabo has served as the Group CEO of Pepperstone for nearly seven years. Previously, he spent almost two decades with various divisions of IG, beginning his career as a Graduate Trainee at IG's London office. Over time, he held roles such as Head of Futures and Options, Head of Dealing, and Managing Director at IG Australia. However, for most of his tenure, he served as Director of IG Securities Japan and later as the CEO for the Asia Pacific Region.

Global Expansion over Prop Trading

When asked about the plans for 2025, Szabo emphasized Pepperstone’s focus on geographic expansion rather than entering the proprietary trading space.

“Prop trading doesn’t align with our strategy,” he explained. “Pepperstone’s value proposition is delivering quality at a competitive price with excellent service. If we can’t do something better than others, we won’t do it.”

The company is prioritizing markets with strong growth potential while maintaining a disciplined approach. “We’re concentrating on global markets, particularly regions where we see room for growth,” Szabo said.

The UK Market and Regulatory Dynamics

And this includes the UK, even despite industry concerns over the UK market’s declining prominence. Szabo underscored its importance to Pepperstone, stating that the UK entity contributes 10-13% of group revenue.

“We don’t pursue licenses for prestige,” he clarified. “Every license we have, we want to monetize. The UK market remains significant for us, especially with the spread betting environment post-budget.”

The company's approach to spread betting has become particularly relevant following recent budget announcements, though industry participants remain cautious about openly advertising these services.

CFD Industry Faces Crossroads as Crypto Exchanges Expand Services

Szabo also highlighted concerns about crypto exchanges potentially disrupting traditional CFD brokers

“Crypto exchanges are deep-pocketed competitors. They’re offering perpetuals and futures, which encroach on our space,” he said. “Physical crypto is an asset class our industry needs to explore more deeply.”

Despite these challenges, Szabo remains confident about opportunities in the market. “The future is bright. There’s a lot of potential, but it depends on how you play it,” he concluded.