ATFX is on a hiring spree – read about it here
Australia is a strange land. We are talking about a place that once fought a military conflict against a bunch of emus and gets freaked out if you try to bring bananas across its border, a country that produced Mel Gibson and the Hilltop Hoods.
But it’s also still a major centre for the CFD industry and as I was in Sydney for a couple of days, I figured I’d go see some people and do a round up of some of the goings on down under.
09:00 am – Blueberry Funded
First up was a short call with Marcus Fetherston. Marcus recently joined Blueberry Funded – the prop arm of Blueberry Markets – as General Manager. Blueberry was already providing services to other props but stopped doing so earlier this year.
“Having your own trading infrastructure, being regulated properly, understanding how to manage risk – these are all things that brokers bring to the market and I think it’s basically what is going to make this industry more sustainable for the long-term,” said Fetherston. “I think this has been apparent for a while now, so it’s great to be a part of it.”
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Blueberry Funded has been in the works for a few months but it only went live in the last couple of weeks. Fetherston oversaw the set up of the business and claimed it has been off to a good start.
“The community response has been pretty positive, we’ve had a killer first week,” he said. “We are not doing a race to the bottom, giving traders whatever they want kind of thing. We want to be sustainable. So that’s meant there have been some hard conversations as well but I think we can change the conversation too about what can actually work long-term as a business for this industry.”
On that point, one factor I’ve been curious about for a while is how so many props are able to spam Google ads (and others) at the moment. Is that sustainable or is it making acquisition harder?
“It’s an interesting one but for a different reason than you might expect,” Fetherston told me. “I would actually say the fact there is no regulation covering this industry means a lot of props have become really good at e-commerce style marketing, to the point that I think they are in some ways more innovative than some brokers are.
“But obviously part of that is due to the lack of regulation. A lot of people are worried about regulation. From my perspective, I think regulation won’t be a problem – it will be the impact it has on props marketing strategies. A lot of them won’t be able to adjust, whereas broker backed firms have a much better backing in this regard.”
An area to watch!
11:00 am – Moomoo
Next up on the Sydney tour was Biyi Cheng, who is Country Manager for Australia at Moomoo. Readers in Asia may be more familiar than others with Moomoo but they are huge.
The company claims that over a quarter of Singaporean adults have an account with them and that they were touching 2m active clients in their 2024 financial year. Net income for that year was also over $500m, inclusive of stock options paid to employees.
We’ll be doing a longer form interview with Cheng soon, so I won’t go into too much detail here. Instead we’ll cover the important points – first up, did he move from CMC Markets to launch a CFD product at Moomoo?
“No, everyone assumed I’d moved here to build up a CFD business but that’s not the case,” Cheng told me. “We do have CFDs on FX in a couple of regions but it’s not a core product – it’s there if you want to trade it but it’s not our main focus at all.”
The other point that had piqued my interest before our meeting was the shift in roles Cheng had to make. At CMC Markets, he was Head of Greater China and Head of Institutional for APAC, Canada, and Greater China. Moving to a Country Manager role is more like being a CEO – so quite a change from just focusing on biz-dev. Has that been hard?
“Yes, it has been a change but not in a bad way at all,” said Cheng. “At CMC my role was more siloed, I was just focused on one particular area and one role. Here it’s overseeing everything and also dealing a lot more with people and keeping them happy. So it’s been a change but a positive one – it was part of the reason I wanted to join the company.”
12:30 – TRAction Fintech / Sophie Grace
After a brisk walk northwards into the CBD, I arrived at Sophie Grace and TRAction Fintech’s Sydney headquarters. There is a gymnasium at the base of the building with rows of punching bags inside. Those lawyers upstairs must be Mishima fans, I thought to myself, ‘Sun and Steel’ and all that – refining the body for greater mental acuity. I ate a Tim Tam when I was inside.
Readers will be familiar with TRAction as their trade reporting company and Sophie Grace provides various compliance and legal services to companies in the CFD and wider financial services industry. So what’s happening in the compliance world?
“At TRAction, we are very focused on the rule rewrites in the various jurisdictions where we do reporting,” said Sophier Gerber, Co-CEO of TRAction and Director at Sophie Grace. “Next up is UK EMIR Refit in September 2024. Then ASIC and MAS Rewrites in October 2024. Because of the significant increase in data required from firms, plus the pairing and matching of the key data fields, this requires a lot of time spent educating clients and assisting them with implementation so that we can be provided with the right inputs.”
Anyone that follows compliance people will no doubt have seen an almost unceasing demand for buying and selling licences. In the UK, part of the reason for that is the apparent reticence of the FCA to issue new ones. Is there a similar trend at play in Australia?
“On the Sophie Grace side, we do see a reasonable level of interest in the purchase of AFS licences for FX and CFD trading, which is not matched by sellers,” said Gerber. “There have been a few new licences granted, which is positive. But they come after a significant amount of time processing with ASIC, which is frustrating and untenable for all but the most determined and deep-pocketed applicants.”
Unlike readers of this newsletter, I don’t find myself eagerly keeping abreast of the latest goings on with ASIC, alert to any tweaks to rulebooks and so on. So, I asked, are there any other interesting goings on at the moment in Australia?
“It’s clear that ASIC is still quite focused on the Design and Distribution Obligation (DDO), which is similar to what exists in the UK, in terms of targeting products to an appropriate audience,” Gerber said. “It is a very difficult requirement to implement in practice and in many ways runs contrary to the natural inclinations of the marketing and sales functions. We’ve seen ASIC take aim at the CFD industry on this – notably eToro, MiTrade, and Trademax.”
14:00 – 26 Degrees
My next stop was across Sydney Harbour to a former submarine base. This is not because I have a penchant for old military equipment but because the area was redeveloped and 26 Degrees just moved their office there.
“We think this will become something like a fintech hub,” said 26 Degrees CEO Gavin White, before walking into the middle of the office with a basketball and throwing it into the hoop which is hung up there. “We are paying the same price for double the space and, as you can see, there are real benefits to that.”
At this point, I had not eaten anything all day except the Tim Tam and so was happy to be plied with sushi as we talked through some of the latest updates at 26 Degrees. One of these was the launch of pairs trading – essentially a simple way of taking a long position in one stock and a short in another.
“This is a strategy that hedge funds have been running forever,” said White. “So this is a way of bringing that strategy to the retail sector. If you think there is a company that is going to be predominant in a sector, then you can go long that company but also short its competitors. And by doing that you are negating every exogenous factor after that.”
The other interesting step that 26 Degrees has taken is to do capital intros for hedge fund strategies, alongside providing prime broker-style services to them. Like the pairs product, this – as far as I’m aware – is not something other companies like 26 Degrees are offering. At the same time, this is a tough gig – both in terms of finding good strategies and the investors they want. So how is 26 Degrees doing it?
“Gavin and I have had a long-term view that PBs would be pulling back from servicing these smaller hedge funds,” said 26 Degrees Chief Commercial Officer James Alexander. “And so we’ve slowly built up a reputation over the last decade to reach that audience.
“We have offices now across Europe and in Asia. So we have the connections there. But then we also have Tiffany [Besnard, Head of Hedge Fund Sales for APAC and NA], who joined last year. She’s got that long history of working on Wall Street and has brought with her all those US contacts.
“So it’s like all these different parts have come together over time and we’re now in a unique position because we’ve got good distribution networks and a strong investor network too, and I think a lot of that is due to our long-standing belief that investment banks would keep pulling back from the PB market for smaller players.”
15:30 – CMC Markets
Much as I would have liked to keep eating sushi and drinking wine in a submarine base, alas, there was one more meeting to get to. So it was back over the harbour to CMC Markets Australia headquarters.
I was there to meet Kurt Mayell – Head of Distribution for ANZ. Mayell recently took up his new role after heading up CMC’s Singapore office. But what does a Head of Distribution actually do?
“The teams I look after now are Alpha CFDs, Alpha Broking, and sales,” said Mayall. “So it’s quite all-encompassing. Marketing is part of distribution, client services is too. If we are doing more B2B projects, that’s also something I’ll have to be involved with. So it’s a lot more than it might sound – I end up getting pulled into all different sorts of things.”
The B2B point is one that’s interesting. CMC’s Australian office was arguably the first to land a big institutional deal with ANZ’s stockbroking business. Unlike the UK, CMC’s Australian entity has had a stockbroking arm for some time. Has this helped it grow more than it might otherwise have done over the last few years, given the increase in interest we’ve seen for stock trading in that time and the way it has helped to cross sell other products.
“I think there’s no doubt that if you look at CMC in Australia now, we are a fully fledged multi-asset platform,” said Mayall. “So if you want to trade or invest, whatever the case may be, you can use CMC Markets. That does help bring in clients and retain existing ones. And I think it’s worth noting too that in Australia we are known now as a stockbroker, we have built that brand up, and we are the second-biggest retail stockbroker in the country.”
B2B has also been one of CMC’s main areas of focus of the last few years. So are there more deals on the horizon?
“What I would say is that when we have deals, like the one with ANZ, it is a big help,” said Mayall. “The proof is in the pudding, right? Companies can see that we are able to provide the services they need to a high standard. When you onboard the likes of ANZ or Revolut, that doesn’t guarantee other business, but it definitely helps in getting it.
“Another thing I’d say is that if you look at the approach we take, it helps across the whole business. And what I mean by that is we build something to that institutional standard but it is then ultimately rolled out across the business and down to retail clients. So you have that high standard, which is not just good for your B2B business but also your B2C division too.”
18:00 – done
After a couple of drinks with the CMC crew it was time to go home. The sun had come down over the harbour and a bar was pumping ‘Bohemian Like You’ by the Dandy Warhols. I put my Airpods on and hit play on the ‘Nosebleed Section’. Now all I needed to do was find a guy on a BMX…
