The new regulatory measures announced by the European Securities and Markets Authority (ESMA) regarding the provision of Contracts for Difference (CFDs) and binary options to retail clients sent shock waves throughout the Forex industry. The CEO of Tickmill UK Ltd, Mr Duncan Anderson shares his viewpoint on what the new measures entail for retail investors, Forex brokers and the financial services sector.
Read on to discover Mr Anderson’s interesting insights and find out what’s next for Tickmill and the industry at large.
How do you view the state of the Forex industry following the new measures announced by the European Securities and Markets Authority?
The proposed measures were first aired some time ago. There was a significant response to ESMA both from the industry and clients. We anticipate the measures will come into force in or around July 2018. Tickmill welcomes strong regulation and the protection of clients’ interests is paramount; however, there is a feeling within the industry that these measures are misguided, costly and ultimately do not benefit client interests.
In your opinion, how will the new regulations affect the future of the Forex industry and market participants?
Additional burdens will be imposed on the industry. This will involve further IT and compliance costs. It is likely that there will be consolidation within the EU and firms ceasing business altogether. Clients will continue to look for better choice and this is likely to push them offshore, something the industry has repeatedly voiced concern about.
How can Forex brokerages remain competitive in light of the new state of affairs?
The cost of business has increased significantly in the EU due to regulatory pressure. Firms will increasingly need to show a strong balance sheet, something that Tickmill has always considered important. Some firms may even pass on specific costs to their clients. Tickmill is regulated in multiple jurisdictions in order to offer its clients a more robust trading environment.
What advice would you give to the Forex trading community?
My advice would be to look very closely at the broker you do business with. Ensure they are financially strong and that they are regulated in multiple jurisdictions. Ensure you have the necessary protections and the ability to choose the investment products and services that meet your needs.
What is Tickmill’s stand on the new measures?
As I mentioned previously, Tickmill is a strong supporter of regulation and we always abide by the guidelines and best practices laid out by regulatory bodies to safeguard the best interests of our clients. I would like to emphasise that our clients are at the heart of our business model and we strive to provide them with the best possible trading environment. For instance, our client funds are fully segregated. FCA regulation in this instance is very clear and should provide our clients assurances that their funds are protected.
Do you expect the new regulations to have any effect on the Group’s financial results?
No, if anything, we anticipate that our growth rate will increase as clients look for better trading conditions in a consolidating market. We are known for having some of the fastest transaction speeds and competitive pricing spreads in the industry; advantages like this mean that we can stay competitive without compromising our values.
How does Tickmill adapt to the new regulatory regime?
Regulations change constantly, so the regulatory regime is always new. Changes in regulation are constantly evolving and Tickmill strives to meet its compliance obligations. We just have to stay compliant, but in essence it is simple – if you put your clients’ interests first you are well on the way to ensuring compliance. Achieving that is just part of the overall cost of the business.
Do you see any new areas or opportunities for growth?
There are plenty of areas for growth and this is one of the exciting elements of our business as it evolves. We are looking at a number of different product areas where we see potential. Our clients are a great barometer for exploring opportunities which we look forward to delivering in the future.
What are the goals of the Group over the next few years?
We have achieved so much in a relatively short period, but we are determined to do so much more. Clearly, we want to maintain current levels of operational excellence and to this, all credit should be given to the amazing team that makes up Tickmill. We would like to continuously increase our competitiveness in our industry and strategically move into other areas where we believe that we can make a real difference to the benefit of all.