In theory, running several different brokers at the same time under different brands does not make sense. If you imagine the cost of acquiring clients as being like an auction process then by running multiple brands, you are bidding against yourself and driving up your own costs. This would not be a smart thing to do.
And yet there are many brokers that do run more than one brand. There are even instances of owners that run several firms using different companies, as opposed to running multiple brands but using one corporate entity to operate them. I like to think that this is similar to a Hunger Games style test on the part of that owner to see which of the execs he’s chosen will come out on top.
But for firms that use one entity to operate multiple brands, the reasoning can seem strange. It’s also something that multiple readers have pointed since I started TradeInformer but then no one actually has a solid idea as to why it happens.
In some instances the answer may be regulatory. For example, BD Swiss appears to no longer operate a retail entity in Europe but previously ran more than one. We cannot say for sure, but it’s plausible that these were used to onboard European clients, whereas the primary BD Swiss brand was just for offshore clients.
Another factor here may be jurisdictional or client segments. With regard to the latter, one brand may be aimed at ‘premium’ or high net worth clients. In contrast, you may then run another that is more targeted at the punters. You can also see the jurisdictional ‘thing’ from how some brands position themselves. For instance, FxNet (me neither) run three brands that appear to target different parts of Europe.
Then you get into more mysterious territory. IronFX owns both its namesake brand and another company called FXlift. But then in the UK they own IronFX and FXGiants. The connection between these brands is less obvious, as is the logic behind it.
One possibility is that it’s a way to deal with a damaged reputation. Obviously no reader can imagine IronFX doing something bad but, were that to happen, then it might be good to have a back up company, which people don’t realise is yours. You can operate in the same market, with the same people working for you, but to the end user it may look like a different company.
This feeds into the other and final possible purpose that different brands. That is basically being the number one, two and three (or whatever) broker in the prospective client’s journey.
For example, many clients in the UK seem to come to brokers via ranking sites (eg. best broker for X). Now let’s say you are in control of brokers 1 – 3 in that list, without the end client knowing. It is sneaky but I guess that would increase the odds of you getting their click.
The downside to this approach goes back to the opening line. Affiliates and ap space typically work on something like a bidding process, so if you are just bidding up ad prices then that seems like it could offset any benefit this holds.
The only other option suggested by another reader was for more nefarious ‘cash flow’ purposes. I was shocked to hear such a thing!
IG hires new CEO, Capital.com hires ex-IG
Last week we looked at the connection between gambling / gaming and the CFD industry. That was timed fortuitously as a couple of days later, IG announced that it had appointed Breon Corcoran as its new CEO.
Corcoran spent the bulk of his career at Paddy Power and Betfair, two firms that would ultimately merge in 2016. Once that merger was complete, Corcoran was CEO of the combined entity.
You could argue that this is a good hire. Corcoran will have a good understanding of the acquisition model, for example. Gambling is also similar in being an international industry, with firms tending to be multi-regulated and active almost everywhere.
On the other hand, CFDs are a weird product and the industry has many strange nuances. These can be hard for an outsider to understand.
Now imagine you are some guy at IG who has been there for ages. Then a NED with no industry experience is made CEO. Next some guy that has zero experience in the industry is the CEO. Murmurs of rebellion may stir around Dowgate Hill.
And then you get a LinkedIn message from the HR team at Capital.com. The urge to rage quit is running high. You are tempted. But will you leave? They do have Playstation in their office. Your fingers tremble on the keyboard. You hit reply.
One guy that did give in to temptation and joined Capital.com last week was John Austin, who was appointed Chief Strategy Officer. Austin spent the bulk of his career at IG, having joined the firm in the mid-90s. After leaving in 2021, he spent a couple of years at LMAX and then had a brief sojourn at StoneX.
Who is next? Dance is probably feeling tempted…but so too is Noble.