Market volatility is usually a positive for the FX/CFD sector. Volatility within the industry itself is a different matter. Last year saw a couple of major upheavals, with regulatory pressure increasing and MetaQuotes ceasing to offer white labels, after its app was removed from the iOS store.
But the industry is a resilient one and, even as it comes under pressure, some companies continue to thrive. Match-Trade Technologies is one such firm and we caught up with the company’s CEO Michael Karczewski to learn about how the company fared in 2022.
DK: Talking to people in the industry, I have heard many different accounts of last year, but they all agree that it was quite chaotic. What kind of year was it for Match-Trade Technologies?
It was definitely a breakthrough year for our company. It seemed that after two years of the pandemic, when the whole industry was achieving record growth, this dynamic would slow down a bit, but we managed to end the year with 100% revenue growth and 175 new customers. That’s over 30% more onboarded brokers than in the previous year.
DK: That’s impressive. How did you manage to get those results?
Certainly, a lot of credit goes to our team because we almost doubled our headcount. Our strategy for this year from the beginning assumed that we would focus equally on developing all our products, not only Match-Trader, our flagship platform, whose popularity skyrocketed in 2022 for obvious reasons.
That’s why also our CRM gained a lot of new functionalities allowing, among other things, to automate the KYC process, better manage risk and improve sales performance. We are committed to ensuring that it meets all the requirements of a professional sales management system.
We also paid a great deal of attention to our crypto payment processor, which is now also available with the support of an EU-regulated processing entity and can provide settlements in FIAT currencies. With these changes, Match2Pay has become a universal crypto payment solution, with which we plan to go beyond the forex market this year. Therefore, in order to realize these plans, we had to increase not only the team of programmers and developers but also expanded our sales team, for which we even purchased a new office in Limassol, Cyprus.
DK: Something you touched on there was that we saw a reshuffling in the platform market. That all happened quite suddenly. First, the removal of the MetaTrader app from the App Store, then the suspension of sales of White Labels by MetaQuotes, were you prepared for this?
Well, yes and no, to be honest. Certainly, the turmoil around the MT4/5 platforms accelerated our actions because the market demanded it. Fortunately, we were technologically prepared, and once again, it was confirmed that the choice of PWA technology to build Match-Trader platforms was like hitting the bull’s eye. Especially now that there are more and more signs in the market that Apple does not seem to “understand” the concept of White Label and treats the applications of different brokers as duplicates.
Of course, the solution could be a main app in the App Store, which will be automatically branded when downloaded by the user. However, such a solution is also not ideal because a single app account collects reviews on all brokers, and everyone understands the downsides. That’s why it’s important to allow brokers to diversify the sources of app downloads. iPhone users can still use the Match-Trader platform even if their broker does not have the app in the AppStore. There are rumours that this is about to change, but until that happens, our platform is one of the few that guarantee a seamless mobile app experience on iOS.
DK: What about MQ’s halting of White Labels sales, has this opened up new prospects for you?
Of course, this one decision by a forex monopolist like MetaQuotes threatened the continuity of the technology providers’ businesses, whose core was to sell MT4/5 White Labels bundled with their own tools. Naturally, the hunt for a new platform began, and I must immodestly say that Match-Trader found itself, next to cTrader, among the most popular alternatives to MetaTrader.
We already had more than 100k active trading accounts on our server, so we could guarantee high processing capacity. We had also been developing the ecosystem around Match-Trader for a long time so that each client could easily adapt the platform to the tools they have, so adapting the platform to the needs of technology providers was not a problem. All this market turmoil took place in September, we sold a dozen servers by the end of the year and, among the clients with server licenses, are leading White Label providers for forex brokers.
DK: But at the end of the year, there was another twist – changes in regulations on SVG. Aren’t you worried that this will negatively affect the market for white label brokers and thus affect your business?
There are so many unknowns in this matter that it’s hard to predict what might happen. You can certainly see a stir among brokers because the deadline indicated in the letter sent out by SVG authorities is approaching. Our company is monitoring the situation all the time, we want to be prepared for different scenarios.
As you yourself pointed out in one of your articles, the new regulations are so far vague that it may be very simple to meet these requirements by declaring that the broker operates only in the SVG jurisdiction, or unfeasible since the vast majority of SVG-registered brokers have no other license. We have to wait.
In my experience, the market abhors a vacuum, and some alternative is likely to emerge. However, it is clear that the forex industry is striving to clean itself up, and attempts are underway to finally solve the problem of scams, which will work out well for everyone. However, it is important not to throw the baby out with the bathwater.
DK: Assuming that all these restrictions will reduce the appearance of scams, do you think that in this situation, MetaQuotes will resume selling White Labels?
What I know for sure is that you can never rule out any scenario, but if I were to listen to what my guts tell me, it doesn’t look like it. I know an example of a broker who has a license outside of SVG and wanted to move his White Label there. However, he was told that, technically, this would involve opening a new WL, and since those are no longer being sold, the only thing left for him is to buy an MT5 server. Given that MQ has also recently raised server prices, it seems unlikely to me that they will want to return to selling WL.
But I see another trend, which I’ll admit surprises me a bit, and which could theoretically influence MQ’s decision. Traders are much more attached to MT4 than we thought. At one point, it was noticeable that CFD brokers were starting to inspire their apps with modern and minimalist solutions in the style of Revolut. And now, when I observe the sites of those who started this trend, I see that MetaTrader has returned to the forefront. I suppose there’s a reason for that.
What are the alternatives to St Vincent & the Grenadines?
A couple of weeks ago we looked at the news in St Vincent and the Grenadines, where the local regulator had announced two steps that would make life extremely difficult for brokers operating there.
At the time it wasn’t clear whether those changes were serious or not but from speaking to a few people in the industry, it seems they are. The result is that brokers now have to prove they have the licensing necessary to target clients in the regions they’re doing business in.
This means SVG is probably finished and, except for perhaps some tax benefits, there is no reason for most of the companies that are based there to continue operations.
Doing some digging around, it seems there are a couple of alternatives with a similar set up to SVG. This author called up regulators in one jurisdiction, which also has IBCs, and (after being put on hold) was told they don’t regulate FX and don’t know what CFDs are (lol), so they don’t regulate them. Others have more concrete plans.
“Our team is actively researching alternative jurisdictions,” said Atomiq Consulting CEO Jonathan Baumgart. “Preliminary research shows St. Kitts & Nevis to be the best alternative for now. Our team can even redomicile the firm to fast track the process.”
Whatever place companies end up going to, it doesn’t seem like a particularly sustainable option. Eventually all the SVG people will move to the new alternative and then exactly the same thing will happen again.
In fact, one registered agent this author spoke to said she is already copying SVG’s regulations as company policy to stop bad actors from setting up shop in the jurisdiction she operates in.
And listening to Naga CEO Benjamin Bilski during an investor presentation last week, it was interesting to see how much he emphasised regulation to shareholders. Reading between the lines, his point seemed to be that running an SVG-style operation isn’t going to cut it moving forward. This was a point made by Baumgart as well.
“Non-licensed brokers currently finding alternatives to SVG or startups must strongly have a pathway to regulation in mind,” said Baumgart. “2023 has proven that the unregulated landscape is diminishing; there are only so many available jurisdictions.”
What seems plausible is that we’ll see a shift where more ‘legit’ brokers go to places like the Seychelles, Mauritius or Vanuatu. Then you’ll have the less ‘legit’ companies hopping from random place to random place, but ultimately dropping off in number as their options run out.
What will happen to MetaQuotes brokers?
One consequence of this may be fewer clients for MetaQuotes. Brokers could get a white label from the company because they were set up as a registered business in SVG and the country didn’t regulate the CFD sector. You could call it a loophole but that effectively meant these companies met the requirements needed to acquire a white label.
If brokers are no longer able to operate in SVG and cannot find an alternative jurisdiction to register in, they won’t meet the requirements needed to obtain a white label from MetaQuotes. That would likely result in clients dropping off.
As a quick test of this, I looked through the SVG company register and picked five brokers at random, excluding larger brands that have other regulated entities. Four of those five had a MetaQuotes offering.
If these companies can move to another jurisdiction then this won’t be a problem. If they can’t or doing so just means kicking the can down the road for another year, then it’s hard to see how they could meet the standards needed to get a white label either now or long-term.
What will happen to these people? It’s plausible they’ll find another provider but it may also be the case they opt to become introducing brokers instead and then seek to become big enough via that avenue that they can set up shop as a properly regulated entity.
