A bit belated, but below is my rambling of thoughts from last week’s exhibition in Cyprus
Roaming the halls and around the pool of the IFX Expo last week in Cyprus, one of the overriding feelings of the event was that it lacked that killer product. There were some interesting items being presented along virtually every line of the industry including payment processors, trading platforms, retention tools, marketing solutions and affiliate management. But unlike last year, no one stopped to ask me what I thought about such and such a product, because it was creating a buzz. This isn't a bad thing, and honestly many of what were last year’s hits in my mind, were only gaining any real traction this year. In addition, one of the sleeper products, Panda TS strategy index CFD, that was presented last year rather quietly, but which I had heard a lot of interest about in the months following the event, never made it to light for some reason. Therefore, just creating buzz doesn't mean instant success.
If You Can’t Join Them Beat Them
ZuluTrade Presenting Their Platform at the Party
A year ago today, MetaQuotes famously issued its warning to Forex brokers to suspend offering products from Zulutrade and Tradency. Since then, the two firms have shed direct dependence on MT4, and have gone ahead and launched standalone platforms of their copy trading products. Talking to representatives of MetaQuotes during the pre-show evening party, I couldn’t resist mentioning that a year ago they had banned ZuluTrade, and today we were attending a party that was being sponsored by them as they showcased their new platform. Earlier that same day, Tradency launched Mirror 360, its standalone product. The evening proved that MetaQuotes' creating hardball isn't snuffing out third parties, but creating more competition for them.
MetaTrader 4 Killer?
Over the past year, among the top most asked questions I received from my perch at Forex Magnates is who will unseat MetaTrader 4. It really isn't a simple answer, as MT4 is entrenched at virtually every broker, with nearly 45% of Non-Japanese online Forex broker accounts on the platform. There are arguably better platforms on the market that integrate easierly with such key broker items as CRMs, Liquidity providers, marketing tools, and third party trading services. Many will even argue that the interface of MT4 is antiquated.
Due to the platform’s limitations, a long line of wannabe MT4 killers have been launched, such a cTrader, tradable, Protrader and the above mentioned products from ZuluTrade and Tradency. But what they lack, and why as of today there is little stopping the MT4 status quo is customer demand for those products. Among them, cTrader has done the best to brand itself as an ECN platform and create some momentum of trader interest. However, their creator, Spotware Systems, has been quiet of late, possibly showing that they are running out of steam in their battle against MetaQuotes.
What emerged though from speaking to brokers in Cyprus, was that there was little demand for a MT4 as much as for complementary products. Some even argued that their involvement with other platforms was a waste of time, as it was an opportunity cost lost to just focusing on sales and marketing. My overall impression is that there are a few platforms that are carving out niches for themselves, such as Tradency’s MirrorTrader from Tradency for copy trading, and cTrader’s ECN brand, but there isn't a product on the market that is generating a “we need to have that” buzz.
The event itself was packed with payment companies, and frankly, brokers I spoke to seemed more interested in those solutions as they offered immediate answers to improving their bottom lines. If I had to provide my own opinion on products, the most compelling offering I saw was NetDania’s NetStation trading platform being offered as a white label solution from CFH. NetStation was one of the buzz products last year, but has taken a year to go from display to availability to brokers. The reason I found the CFH solution compelling, is that it provides new brokers a full front to end solution, where they can market their traders what is now still a unique platform, with similar white label conditions to CFH’s MT4 broker offering.
In terms of a runner up, one product that has made visible steady improvements since last year is X Open Hub’s xStation front to end platform. The platform operates well across all platform types (except for the silly Sony Watch they had on display, but even X Open Hub Managing Director, Jakub Zablocki, will be the first to let you know it was more for proving you can trade on a watch than for design and usability value). But, that’s not what interested me. The part of their offering that was unique was the WL Creator, which fits a need I often hear mentioned from brokers. We posted about the WL Creator in the past, so it’s not a new product per se, but helps round out what is quickly becoming a very compelling overall offering from X Open Hub. In the way that I viewed Leverate’s new Sirix Webtrader addressing some core demands from broker customers last year for a more fine-tuned mobile and web-based platform, X Open Hub has checked a lot of boxes of broker needs this past year.
The Big Announcement That Wasn't
If you ask MetaQuotes what the MT4 killer is, they will answer you that it is 100% going to be MT5. Their representatives remained bullish on the product, and for good reason. Despite bumps in the road that caused both traders and brokers grief when Build 600 was released, there is currently very little separating MT4 and MT5 from the end user perspective. The divisions between the MQL4 and MQL5 programming languages have been thinned, allowing for easier cross-platform development and marketing of MT4 and MT5 EAs.
As such, going into the event, I was under the impression that MetaQuotes was gearing for a big MT5 push during the expo. They even announced that they would be presenting new features in Cyprus. Despite anticipation for something new, and representatives giving me their bullish MT5 view at the pre-event party, all we got was basically a VPN service offered in conjunction with Webzilla. Truthfully, it’s not a bad product, and is being well priced starting at $10. They couldn't give me any technical specs, so I assume that co-located VPN will be faster and provide more memory resources, but at $10 it is a fit for your average EA buyer who wants a low cost alternative to host their strategy 24 hours a day. One technical item that was in its favor is that the product leverages Webzilla’s footprint of servers scattered across the planet, providing users VPN hosting in numerous locations around the world.
Regulation
So what is the next big thing? That’s another question we quite often get. If I had to come up with one answer from the expo, it’s regulation. Sure, you are wondering what that means, and if the NFA is going to launch their own broker offering to finally put the final nail in the coffin of US brokers (Hmm, maybe).
One of the major trends we are seeing, and one that our CEO, Michael Greenberg, highlighted in the 2014 Industry Predictions, is the split between tightly regulated and banana republic regulation taking place. On one side we have the US and Japans of the world raising capital rates and decreasing margin usage, with the UK and Australia similarly appearing on their way to apply stricter rules. On the other hand, flexible jurisdictions like Belize and Mauritius are seeing a spike in firms registering in those countries. Among brokers, we are seeing firms seeking more globally recognizable regulation, such as several CySEC firms recently getting licensed in the UK. In addition, demand for CySEC licenses themselves remains strong, with many non-regulated brokers who can’t afford their own regulation partnering with regulated Cyprus shops.
Simultaneously, we are seeing a return of the non-regulated broker (or lightly regulated) broker appear on the scene. Specifically among binary options brokers, brands are less concerned about the need for regulation since customers don’t demand it. Probably worst of all, has been the rise of clone companies. These are Forex firms that just fake their regulation and write the details of another firm’s licence numbers. The effect is that not only are they blatantly lying to customers, which is a sign they are probably out to pocket all user deposits, but also causing a bad name for the regulated body.
What this all means is that the industry is setting itself up where regulation is going to play a big part of the future. Therefore, the trend is that new brokers will need to answer whether they are here to play the long or short game. To play the long game, means establishing meaningful regulation early in the firm’s life, allowing it to market across most regions. Playing the short game, entitles not caring much about regulation and marketing across the globe. However, as regulatory or customer warnings build, it means higher costs of processing Payments as well as more difficulties in onboarding new clients due to negative online reviews posted across the net.
Okay, enough ramblings. These are one man’s observations. Were you at the IFX Expo? If so, what did you think?
