Transitioning from operating as a retail broker to an institutional broker has proven challenging for many firms. ATFX Connect has successfully managed this transition, and now plans to expand its institutional offering, writes Ergin Erdemir, Head of Marketing at ATFX.

The retail trading market and the institutional trading market are different in a number of ways. While retail traders buy or sell securities for personal accounts, institutional traders buy and sell for a group or corporation that they are managing. Costs can vary for the two forms of trading, and institutional traders may find that they have access to investments that are not available to retail traders, such as swaps and forwards.

The differences between the two markets mean it can be difficult for brokers to transition between them. At ATFX, however, this hasn’t been the case. As a globally established company with 14 offices worldwide, our experience across numerous markets has provided us with a breadth of knowledge that enables us to adapt regardless of whether our clients come from retail or institutional spheres.

We plan to expand even further during 2020, focusing on several emerging market locations as part of our global strategy to increase our footprint as both a retail and institutional broker. ATFX is already recognised among important regulators, including the UK’s Financial Conduct Authority and the Cyprus Securities and Exchange Commission, and we plan to achieve regulatory approval in several other markets in the near future.

We have recently opened our new London-based institutional arm, ATFX Connect. This fintech venture is set to launch a contract for difference (CFD) package, whereby the seller agrees to pay the buyer the difference between an asset’s current value and its value at the time stipulated in the contract. With this new package, we hope to set ourselves apart from the competition, as our clients will be able to pass their CFD pricing to their own clients via an exchange data solution.

Another way we differentiate ourselves from other players in the market is by meeting our clients’ strong demand for financial education. This has become a core part of the company’s offering. ATFX wants to ensure that all its clients fully understand the basics of trading and the risks involved with entering new financial markets.

Eastern promise
China is currently the world’s second-largest economy and presents ATFX Connect with an exciting opportunity to expand its institutional business. Recently, the Chinese Government considered opening up the interbank foreign exchange market to include non-bank financial institutions; we believe this will drive huge demand from retail and institutional brokers, locally and on a global scale.

The company sees the potential to partner with wealthy, long-term investors that are looking for an experienced financial institution offering a high level of regulation in order to safeguard their wealth. As our name suggests, ATFX Connect wants to be the bridge between customers and an expanding economy.

There will also be growth in the spending power of high-net-worth individuals (HNWIs) in the region – this is who the company’s bespoke services are aimed at, along with asset managers, regional banks, family offices and other brokers. Considering the expected spending from this demographic, paired with middle-class consumerism, we see that sectors such as healthcare, travel and leisure will play a part in driving the region’s economic growth, presenting us with an environment in which to nurture and enhance our offering. Another opportunity lies with the growing number of brokers in Asia – especially in Hong Kong, South Korea, Japan, Singapore and Indonesia. We are confident that our liquidity solutions will meet their needs.

Asia is also recognised for its innovation, infrastructure and technology, and these key sectors reflect our ambitions and goals as a newly developed institutional brokerage. ATFX Connect’s head of operations, Matthew Porter, and senior sales head, Marc Taylor, have both participated in a media tour around South-East Asia in order to drum up interest in our solutions. The tour has been a testament to the relationships we have built with different media houses, as well as other professionals in the institutional sector. Porter and Taylor discussed topics including the technology powering our institutional platform and the investments behind our product offerings, providing insight into what next-generation execution services will look like.

A challenge worth tackling
The growing tension between the US and China has led to drastic declines for some Asian stocks. At the beginning of October 2019, Japan’s Nikkei 225 dropped by 0.8 percent, while Hong Kong’s Hang Seng Index fell by 0.3 percent and China’s SSE Composite Index by 0.1 percent. Beijing started printing economic data in 1992 and in the time since, the country has never had economic growth as slow as that being recorded now (see Fig1). China’s Q3 2019 growth recorded just six percent. With the economy under this sort of pressure, it remains to be seen whether now is the right time to launch an institutional trading arm in the country.

Nevertheless, there is much to be excited about in the Chinese market – particularly the growing number of HNWIs. Real estate prices and the stock market appear to be the two main vehicles driving personal capital appreciation for HNWIs in China. Catering for HNWIs in this region is sometimes considered challenging by western institutional brokers entering the market, as they are a demographic known to follow specific rules of business etiquette, shaped by traditional cultural practices. As such, we have positioned ourselves as the logical next step for China’s high-net-worth population. We have tailored our services to meet the demands of HNWIs, as well as asset managers, family offices and other brokers. We understand that wealth obtained by institutions and HNWIs must be carefully monitored, so risk management is and always will be a priority. ATFX Connect’s risk management solution enables the user to capture risk, view open positions and trades, and monitor equity in real time.

Branching out
We pride ourselves on being part of the AT Global Markets group, which has established a global presence. By combining this network with our establishments in the Far East, we plan to ease our transition from a retail-only broker to a rapidly expanding fintech company with the capability to facilitate and partner with a range of diverse clients via our new multi-access platform.

Having successfully opened our institutional division in London, the next step for our team was to head to South-East Asia to discuss future plans in the region. They visited Shanghai, Hong Kong, Taipei and Malaysia – all economies where the company sees huge growth potential that will attract further investment from local and global businesses.

Looking to the future, the company recently set up its bespoke digital platform, through which the fintech arm of the business can offer Tier 1 bank and non-bank liquidity solutions, competitive spreads, low latency and multi-platform access. We continue to invest in technology and infrastructure, and we are currently focusing on ways to enhance our own aggregator and bridge. Through our flexible, client-centric approach, we want to become the main institutional broker in China. Additionally, we want to expand to the Middle East and other regions in Asia in the future.

Latin America has also seen a marked increase in multinational cross-border activity in recent years, both in terms of financing and business. There is now a growing demand from HNWIs based in the region to trade financial products. With AT Global Markets opening an office in Mexico, we will be able to work with clients in Latin America, ensuring they have the chance to participate in international markets and currencies via our multi-access platform. Whether in Asia, Latin America, Europe or elsewhere, ATFX Connect will continue to deliver the best possible services to our clients so that all their trading demands are met.

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Legal: ATFX is a trading name of AT Global Markets Limited (ATGM, registration number 224226 IBC 2017). ATGM is an International Business Company in Saint Vincent and the Grenadines. Registered address is: The Financial Services Centre, Stoney Ground, Kingstown, St. Vincent & the Grenadines.