There are close to 50 investing apps that people in the UK use according to review site InvestingReviews, suggesting there are either too many of them or it’s a good game to be in. Alternatively it might just be that everyone needs an app now.
Either way, IG Group is planning on launching its own investing app, with the company now hiring for several roles in what it calls ‘an incubated startup’. According to specs for those roles, the company is planning on launching “an app-first offering that will reimagine the world of investing.”
It seems fair to assume the app is going to be for share dealing and investing in IG’s ‘managed portfolios’. The reason I make that assumption is the company itself distinguishes between ‘investing’ (the services just mentioned) and spread betting / CFDs.
That would make a difference to the existing app, which currently allows you (at least in the UK) to switch between leveraged products and ‘normal’ investing. Alternatively I am wrong and the plan is to just make a better version of the existing app, which feels a bit janky.
Assuming it’s the former, IG would be following in the footsteps of a couple of other major players. CMC Markets has set up its own standalone investing business in the UK, CMC Invest, which operates like a startup within the company and has its own app that’s solely for share dealing.
Similarly, asset management group M&G launched an investing app in January of this year, via a white label agreement with Moneyfarm. That app is slightly different as it seems designed solely to funnel retail money into M&G funds, but it fits in the same category.
Then of course you have the startup players in the space. Some of these, such as my former employer or Lightyear, are solely for stockbroking. Others, like Plum or Revolut, have tacked stockbroking on to a wider set of services.
The question for me is whether CMC Invest or this new IG app can really attract the meaningful sums of money needed to make their stockbroking services viable. If they do it will be a slow burn and will mean both companies have to eat a lot of marketing and development costs before they become profitable.
On the other hand, IG could end up adding in leveraged products to the app. At that point it becomes a cross-selling exercise and, if the amount made from cross-selling offsets those other costs, it is worth doing.
Whatever the case, IG looks like it’s going the whole hog in fostering a ‘start up’ environment. If you look at the job specs they all have the cringe-inducing, anti-corporate-but-actually-corporate language of the startup world.
One thing that particularly caught my eye was the use of the word ‘delightful’. For example, IG says that product designers “will be responsible for delighting [customers] with a beautifully designed and intuitive UI.”
I’m not sure what the origins of this annoying use of the word ‘delightful’ are but it is very popular in tech world and is something Robinhood does all the time. For example, here is Robinhood CEO Vlad Tenev talking about lengthening trading hours for customers…
“Over the coming weeks, customers will get an additional four hours to trade in real-time while maintaining the same delightful and simple user experience they’ve come to expect from Robinhood.”
Or here he is on a recent results call with analysts
“We can help them build their portfolios, while serving their daily spending needs all with the delightful and innovative user experience they have come to expect from Robinhood.”
And here is Robinhood’s PR person speaking to the FT
“It’s never been easier or more delightful to build a portfolio and invest for the long term.”
I could go on. Other unctuous, overly familiar parts of the startup world include branded streetwear, using the word ‘folks’ in corporate comms, and Ned Flanders-esque internal names for company employees. For instance, Robinhood employees are known as Robinhoodies. Pretty cool, eh?
I’m sure all the folks at IG, known internally as I-jee-ah’-roonies, will be looking forward to delighting their spread betting customers with high leverage and branded Supreme style hoodies. Get to it guys…I mean folks.
Binance is toast
Imagine if your compliance officer walked into the office one day and said, “howdy there folks” (it’s a start up) “I’ve noticed some suspicious transactions emanating from the Levant region. I think terrorists might be using our platform to transfer money.”
And your response is, “yea they are but don’t worry about it, it’s barely enough to buy an AK-47.”
In a normal organisation this would not go down well. At Binance the compliance person responds by saying, “we see the bad, but we close 2 eyes”.
At the start of this year we looked at some of the reports circulating about Binance and questioned whether the company was going to end up as toast. The answer is probably yes but when you say this, people automatically assume it’s going to happen instantly, as opposed to it being a slow burn.
And yet the signs are there. First we had the cutting off of bank partnerships. Now there is the CFTC case against the crypto platform.
Assuming the claims made are true, then they are even worse than the ones we saw before – and those were already terrible. For example…
- When it was pointed out that a terrorist organisation may be using the platform, the above quote on AK-47s was a real response from an employee.
- When criminals were using the platform, the company’s money laundering reporting officer(!!!!!) agreed and said “we see the bad, but we close 2 eyes”.
- The MLRO also made up a fake annual report for auditors
- A quote from the company’s chief compliance officer(!!!!) saying Binance “doesn’t even do AML namescreening/sanctions screening”.
- The company told US clients how to onboard on their non-US entities
- The company set up loads of accounts to b-book clients, without telling them
- The company gave some trading firms the ability to front run orders
I guess these things could be taken out of context or merely be false accusations. It is hard to see that being the case given they’re based on internal communications.
At this point if you were a bank almost anywhere in the world, it is hard to see why you would work with Binance. The risk that you get screwed for backing money laundering, crime, terrorism etc. is too high.
Beyond the fact I think the company is going to lose this case, this is going to be the key problem for the company moving forward. Much like certain players in the CFD space, banks may be almost like a quasi-regulator, making it much harder for Binance to do business.
What’s also interesting in this case, and has to some extent been lost in the noise surrounding it, is the fact that the CFTC is overwhelmingly focusing on the fact Binance onboarded US clients. Again, this should be a lesson for CFD companies. Never, ever go after US clients. Only bad things will happen.
Fractional CFDs
One of the things that always used to be annoying at my former employer was the fact it was a huge headache adding US ETFs. This is because US issuers do not have to produce KIIDs, which are a regulatory requirement in the UK.
However, when we’d explain this to customers, they’d say, ‘how come company X has it then?’ And then you’d go to company X and they were offering a CFD on the ETF.
Another similar thing would happen with certain fractional shares. Lots of CFD providers claimed to be offering these when they were actually just offering…CFDs.
That probably won’t be happening anymore in Europe. This week ESMA issued a statement on this practice. This can be summed up as ‘CFDs aren’t fractional shares. Stop saying that CFDs are fractional shares. Start saying they are CFDs’.
Is anyone surprised that happened? Probably not. Onwards to the next regulatory arbitrage!