Emperor Financial Services Group (EFSG), a Hong Kong-based retail forex broker, is entering the global markets, leveraging its popularity among Chinese communities. Brian Tsui, the CEO at EFSG, revealed to Finance Magnates that the broker has initiated processes for license application with anticipations for approvals from Financial Conduct Authority (FCA) and Cyprus Securities and Exchange Commission (CySEC) and is even establishing a physical presence.
Penetrating the West
EFSG is a part of the larger Emperor Group, a well-known name in China. The group company has massive visibility in China, and EFSG plans to leverage this popularity for its international growth.
"When we go into a new country, a new area, maybe we can start working with those Chinese communities," Tsui told Finance Magnates in an interview. "This is how we can leverage ourselves, leverage our brands. At the same time, we wish to share and introduce EFSG to those new non-Chinese clients."
The EFSG also set up an FX brokerage unit licensed in Saint Vincent and the Grenadines, branded as EMPEROR Xpro. Tsui revealed that the group has plans to "fade that offshore brand away" after it receives a license in a reputable jurisdiction, primarily in Europe.
A Healthy Mix of Clients
The brand EFSG was established in 1978 when it offered FX trading and later added bullion products. Its clients are concentrated in Hong Kong, mainland China, and a percentage in Southeast Asian countries like Malaysia, Indonesia, and Singapore. The international expansion of the broker started by tapping institutional clients.
"We started building some kind of institutional clients based in Europe and the Middle East," the CEO at EFSG said.
However, institutional clients only cover 15 percent of the broker's client base. Among the rest, 45 percent are direct clients, and the remaining 40 percent were onboarded under the agency model.
"We do have IBs everywhere. They introduce the clients to us," Tsui commented. "So I would say, is a healthy level, but obviously, we can improve a little bit on our direct clients side."
Although Tsui did not reveal the percentage of trading volumes generated by the segments of its clients, he revealed that most of the broker's business comes from individual traders, as institutional clients mostly engage in hedging.
"And not just because we have a long history, we also have a good credit history, because of the brand names of Emperor Group in Hong Kong," Tsui added. "So we also offer a lot of credit to our clients, and they don't have to put a lot of deposit to us. So it is quite easy for them to manage the cash and, of course, the liquidity ."
Risks of IBs
Dependency on IBs brings challenges. Sometimes, IBs are inclined towards shady practices as their commission directly depends on the trading volume from clients onboarding through them. For brokers like EFSG, managing IBs can be a challenge, mainly when so much of its business comes through them.
"Not all IBs are bad. Some are very professional and focus on building up their business," Tsui stated. "We review every six months to make sure the IBs are really introducing clients we really want. If the introduced clients are not really trading, we discuss with the IBs if there will be any improvement in the coming months. If the problem persists for another five or six months, we suspend or even terminate the relationship between the broker and the agents."
Transforming Traditional Business with Technology
EFSG is one of the brokers that started with legacy infrastructure, but It has now modernized. It jumped to online trading as the industry moved towards it and added the MetaTrader 4 platform to its offerings around 2010. Now, it's taking a further leap to improve its digital infrastructure.
"In the last three years, we have started transforming into a new modern way to do business," Tsui mentioned. "Right now, after we change, we transform, we become more like UK or Australian brokers because we do have our own platform. We are building up our own trading systems. We have our own CRM. We have lots of new apps."
Elaborating on the drawbacks of MT4, he said: "It is just like a trading platform, nothing more than that. It doesn't have a very good CRM, and it does not come with any AI or data migration capabilities. It's not a data platform, so everyone needs to build a lot of things around it."
With its in-house technology, EFSG is more focused on building a community of traders. "On our new trading system, traders will be able to interact with each other. They can follow each other at the same [time], share their views. It will become a community in our new system," Tsui pointed out.
"And because we are a conglomerate with so many different businesses, we are leveraging our other business units to incorporate their products and into our loyalty programs into our system and make our clients feel more like all in one portal."
He also acknowledged the hurdles of offering new trading platforms to existing traders who are already comfortable with another platform. Despite the challenges, he pointed out that: "if you have more push factors for them to move rather than some pull factors, it will make them feel more comfortable."
