We attended the Forex Magnates summit in London on Tuesday 18th and Wednesday 19th November which we found very interesting, well organised and deeply insightful with regards to the where the retail forex industry is heading.

Key industry figures who are at the forefront of shaping this direction where all present and provided their thoughts, concerns and overall outlook on what the key drivers are that are moving the industry forward.

Below we offer our own view of the key highlights of the event and general sentiment we got from talking with industry professionals.

The general feel we got from talking with industry professionals is that the retail forex space is starting to mature is now becoming less of a wild west for clients and new comers alike. Regulation, rapid technology developments and increased competition are dominant themes on the minds of more forex executives at the moment. They key question then appears to be how each broker can really differentiate themselves and keep abreast of their competition.

FinTech & Innovation – Another buzzword or here to stay?

The 1st day of the event kicked off with an innovation panel which saw FinTech start-ups presenting their product to a panel of retail fx industry veterans who are the movers and shakers in the space.

The presentations were split up in two sets of five were one group presented a new product, technology solution to their existing business where as the other group was comprised by pure start-ups who were presenting their product for the first time and launching at the expo. We particularly liked this twist and the excitement it brought to the participants.

We were impressed with some of the presentations and found some ideas to be innovative while others were more of a re-hash of technology solutions that already exist out there and in case where they are not, it is probably a matter of time before they are copied by one of the other technology providers. The one thing we keep reminding ourselves is that barriers to entry in the tech space remain low and are likely to remain so.

The two that particular presentations that stuck out to us both for different reasons were the Normann technology (http://normann.io/) which uses behavioural science to effectively manage traders decisions as per one of the co-founders and presenter. Our understanding and key takeaway is that Normann is essentially a position sizing algorithm that assists novice traders to better manage their positions/leverage and more seasoned traders to take more risk by optimizing their position size to a level where both the trader and the broker make more money.

Our verdict was that while this is an interesting concept we saw no evidence of how this is done, where the behavioural aspects come into play and left us feeling that this product might be a question of mathematics and implementation of tried and tested money management concepts in use by professionals in the banking and asset management space. Final opinion: good concept and ideas – needs more work.

We were particularly impressed by Tradimo Play As (www.tradimoplay.com) and certainly thought that the concept is one with potential. Tradimo is effectively a trading school/simulation game where novice traders can learn to trade by playing a trading game. The concept as described by one of the founders is similar to a flight simulator where pilots train while learning to fly.

Tradimo certainly sounds like an app that can take hold of the market, particularly as there are multitudes of novice traders who would love to have the experience of learning to trade prior to committing their hard earned cash to find out the hard way. While simulated trading is certainly not the same thing as actual trading particularly in the retail forex space where brokers sometimes work against their client interests, tradimo looks like a safe and secure environment for traders to attempt different strategies and develop some of the skills need to trade successfully.

Our overall verdict on Tradimo was that we were certainly positive on the idea and while trading simulation or paper trading is nothing new nor revolutionary we felt there was a new spin to the product that is likely make it a compelling story and bring renewed interest by brokers and traders alike. We look forward to trying it!

Incidentally Tradimo was elected by the panel as the winner of the start-up contest and we certainly agree with the verdict as we find Tradimo the concept with the most promise.

Forex IPO’s – To list or not to list and where to do it?

Another panel we attended which we found particularly interesting and of very high calibre was the panel discussion on the question of forex brokers going public.

The panel discussed the advantages of going public and how this potentially raises the profile of the firm while also opening it up to scrutiny by the market and investors. Panel members also discussed the ideal location for listing a forex broker.

The view was that London is the ideal location due to its central location and close proximity to the major markets of Europe, Asia and the US and the GMT fact all play in favour of the LSE as being the exchange of choice. The added benefits of listing on the Alternative Investment Market in London which is friendly to early stage companies such as many forex brokers that might be considering a listing was also discussed.

A key comment with regards to the perception that valuations in the US are higher as opposed to what they might be in London was also discussed and it appears that this is in general a myth however it might hold water in cases where firms might be different sectors particularly some starts up in the technology space.

Other topics touched on, was the question of liquidity and communication with the market and investors once the firm lists. The key issue in these cases was seen as a question of making the right choice of partners who will work on preparing the broker to list and also manage all the PR and communications flow during the whole process.

Awards & Close

The two day event came to a close with an award ceremony and social event at the bar of the Grange St Pauls Hotel in London. Our overall impression of the whole event was very positive and felt it did a great job in bringing together industry participants who were able to discuss current events, developments but also to get to know each other on a more informal out of work basis. Congratulations to Forex Magnates for doing a great job with organising the event. We look forward to attending next year!

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