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Welcome back to The C-Suite, a once a month interview where we speak to senior executives in the online trading industry.
This time we’re talking to Sam Eder.
Sam is the Founder of broker MarketMates, which went live last year.
He’ll also be a familiar face to some of you, having been in the industry for almost two decades – including an eight-year stint at OANDA.
Can you give some background on yourself and how you ended up founding Market Mates?
I started out at GFT, way back in 2008. That was literally the bottom of the market but that year GFT made more money than it ever had before. So I learned early on that brokers are a good place to be when bad things happen and there is higher market volatility.
After that I went on to work at a number of different brokers and also founded a signals service. Before starting Market Mates I was working for OANDA in their Singapore office for seven years and was Head of Emerging Markets.
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And why did you start the company?
A big part of it was frustration at working at a big company. OANDA was acquired by a private equity firm when I was there and it led to a big cultural change. Part of that was not unjustified but I think there was such a heavy emphasis on profit-making and the bottom line that you could end up losing focus on providing a good service to clients, which is what I wanted to do.
The other part was more to do with how slow you can move when you’re at a more established brand. Being Head of EM, it was just such a headache to get anything done – big or small. So it was seeing all the things in that role that I could improve and trying to get them done.
At the same time as I was thinking of that, I ended up meeting my business partner and investor as well. So I got a bit lucky there – things seemed to fall into place.
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So is that why you have a subscription model?
Exactly. The idea was to remove as many additional or hidden fees as possible. So you as a trader pay a flat fee and you know you won’t get any additional markups to spread or commissions or conversion fees. You can see what you pay and don’t have to worry about any hidden fees hitting your trading profits.
My impression is that a lot of clients don’t care that much about this kind of stuff. If you look at a lot of spreads or pricing for CFD brokers, they are often very high and yet those companies continue to onboard a lot of clients. Am I wrong?
I started out in phone sales and did it for a long time. Believe me, people care. It’s one of the things they ask about the most – what’s your commission and what’s your spread. People are very cost conscious.
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And is there a willingness to pay?
I would say it’s too early to say that. We are still early on in our journey and, although we’ve got a Mauritius license and have onboarded a good number of clients, we can’t onboard Aussie clients yet. But the feedback there is very positive – it’s basically ‘can you hurry up and get your license please?’
Is that typically more experienced clients? I look at the product and figure you would have to have some knowledge to understand the benefits of this model
Yea that’s spot on. I think if you are paying that amount, it’s going to be someone who is trading more regularly and in larger size. Someone who deposits $100 to test the waters and comes back two months later to open a small position is probably less likely to find it appealing.
That being said, the goal is to make this package more comprehensive than just pricing. So your subscription should cover your education, your analysis tools, and credit for your prop or brokerage account. I think adding those to the offering will make it more impactful for newer traders, compared to purely having better, more transparent pricing.
You mentioned that you think there are problems to solve in the broker space. Beyond pricing, what are those?
It’s a bit pie in the sky but for me the main problem to solve is client losses. I would be so happy if we got to a point where we are the broker with the lowest client loss ratio.
So one of the things we’re doing to work on that at the moment is building an AI bot, for lack of a better term, that can give clients feedback on their trading activity. That will basically feed into your account and tell you where you need to improve, what mistakes they’re making, what strategies they can configure. It’s kind of like their own AI-based trading coach.
On the prop point, it’s interesting that you decided to add that. It seems like some brokers are totally against it, whereas others have really gone for it. Why did you add it?
I think it solves an obvious problem, which is if you are a client and can’t trade in large size, you have a clear path to getting a larger size account. The other point is that I have a small trading community myself and everyone is asking about prop trading. Every single person wants to try it. You have to listen to feedback like that.
I was at the event in Cyprus a couple of weeks ago and it was very noticeable that there were more props there. They also felt a lot more optimistic than the broker industry. So did you ever think of ditching the broker arm and just doing prop?
I would agree with that point. Prop reminds me a lot of the 2010 era in the broker industry, where you had those new players like Pepperstone or Axi coming to market. I feel like prop is at that stage and it will probably consolidate, you’ll get regulation and so on.
For the broker part, the way I look at it is, are there problems for traders that you can solve? And my answer is there absolutely are. So I’m optimistic that we can solve those problems and build a business on the back of it.
Are we going to be a multi-billion dollar unicorn? Probably not. But the reality is in this industry you don’t have to get to that size to have a great, successful business. My business partner had his biggest success in asset financing. Was that a groundbreaking new product? No, but he solved problems people had, made a better product than his competitors and built a great business on the back of doing that.
Something I have heard is that ASIC is very against issuing new licenses. You are trying to get one. Have you ever considered just ditching it, and focusing on EMs with your Mauritius license?
I don’t think ASIC are against new licenses but I think they are being very cautious about who has one. What I think they particularly don’t want is someone taking the license then selling it shortly afterwards to someone else, like an overseas owner, who they don’t want to operate here. So it’s less about not wanting to issue new licenses and more about not wanting to issue them to bad actors, who have created problems for this industry in Australia in the past.
But to your question, no, we still think there is a great opportunity here and in other tier-1 markets. I think the model we have is actually more disruptive in those markets against the big, established players, compared to the sorts of companies that are more active in emerging markets.
You also don’t have a MetaTrader license at the moment. Is that something you’ll add?
It’s definitely something you get a lot of requests for so it will probably happen down the line.
Why do you think so many clients want it?
I think it’s a lot like having an iPhone. Some people just only want to use an iPhone. You could show them that another brand that has different features or products that they might like or which are actually better, but it doesn’t matter to them, they’ll still just default to an iPhone. So it’s kind of a brand thing, I guess? They’ve done an amazing job at marketing.
On the brand point, you are obviously entering a crowded market. Is that something you’ve had to think about to make yourselves stand out?
Absolutely. I think if you go to our website, it’s visually different from many of our peers. The other move we’ve made is to be as open and transparent as possible. So I have had to put myself out there a lot, which is something I think we have to do to succeed.
