Close Menu
  • News
    • Broker News
    • Tech News
    • Institutional trading
    • Interviews
  • Analysis
    • Newsletters
    • Prop Weekly
    • Marketing Newsletter
    • Guest Posts
  • Learn
    • Start a broker
    • FX CFD Licensing
    • Liquidity
    • Regulations
  • About
    • What is TradeInformer
    • Who runs TradeInformer?
    • Contact
  • Subscribe
LinkedIn WhatsApp YouTube
TradeInformer
Subscribe
  • News
    • Broker News
      • TradingPRO's prop firm TradingPLUS website
        TradingPRO officially launches prop trading arm TradingPLUS
      • Funded Unicorn shut down notice on company homepage
        German prop firm Funded Unicorn shuts after “seven-figure loss” from a-book model
      • Trading 212 app
        Exclusive: clients at multiple UK brokers targeted in Ostin pump and dump fraud
    • Tech News
      • Devexperts
        EAERA Integrates with DXtrade to Deliver Seamless Broker CRM Solutions
      • cTrader post IFX Int website
        Spotware concludes a successful iFX expo international with Best Trading Platform Global 2025 award
      • Match-Trader
        Match-Trader launches new interface, will demo at iFX Expo this week
    • Institutional trading
      • Neil Panbari
        CME Group hires Neil Pabari as Head of APAC Retail Sales and Distribution
      • Marco Maggioni Hirose financial executive
        Ex-Finalto, iSAM exec Marco Maggioni joins Hirose Financial prime team
      • simon halliday mas markets
        Scrum time: MAS Group hires ex-England rubgy international as Key Partnerships Adviser
    • Interviews
      • Gareth Hazelden
        Atlantic Capital Markets: Cornwall, Dubai, and a 77k client database
      • Tom Fawcett Onyx Markets
        Building a new UK broker, with Onyx Markets Dealing Head Tom Fawcett
      • Todor Georgiev
        Exclusive: Todor Georgiev on launching prop firm Funded7
  • Analysis
    • Newsletters
      • best forex brokers UK search in Google AI Mode
        Will AI kill forex broker affiliates?
      • Limassol
        Last week in Limassol: 5 takeaways from Cyprus
      • Hugo's Way
        Suicide Squad? Offshore brokers are targeting US clients – and nothing is happening to them
    • Prop Weekly
      • TraxNYC picture from website
        Alpha Prime, diamond dealers, and Million Dollar Traders
      • FTMO
        How much do Alpha Capital, FundedNext, FundingPips, and E8 Markets make?
      • Beijing
        Gold, prop firms and scammers in China
    • Marketing Newsletter
      • Axi branding at Bahia football match
        Brokers are sponsoring EM sports teams
      • Pump those numbers
      • swissqote logo
        Does branding matter?
    • Guest Posts
      • XM prizes
        XM Is Giving $500,000 in Prizes to Worldwide Partners
      • PropShield Centroid Solutions
        Centroid Solutions Announces PropShield: A Centralized Intelligence Platform to Protect the Integrity of Prop Trading Challenges
      • Trade Tech Solutions: Revolutionizing Prop Firm Technology Under CEO Edoardo Dalla Torre
  • Learn
    • Start a broker
      • FTMO office
        How to start a prop firm for funded traders
      • Start a forex business (that isn’t a broker)
      • St Vincent and the Grenadines
        Cheapest country to start a forex broker
    • FX CFD Licensing
      • Mauritius airport
        FX/CFD license in Mauritius
      • Seychelles island
        Start a FX/CFD broker in the Seychelles
      • Labuan FSA
        Start a forex broker in Labuan
    • Liquidity
      • FXIFY Homepage
        What do prop trading firms do?
      • trading chart on a screen
        How do prop firms make money?
      • metatrader application on phone
        STP vs A-book for FX/CFD brokers
  • About
    • What is TradeInformer
    • Who runs TradeInformer?
    • Contact
YouTube LinkedIn WhatsApp
TradeInformer
YouTube LinkedIn WhatsApp
Subscribe
Home » What should start up brokers do in 2023?

What should start up brokers do in 2023?

December 12, 20225 Mins Read Newsletters
Share
Twitter LinkedIn Copy Link Telegram WhatsApp

A few months ago I went for a beer with someone in the CFD world and, because we’re both really cool and fun people, we ended up talking about different methods of onboarding clients. 

The conclusion was that, although getting clients directly is the optimal solution, it can be very difficult to do so. As my counterpart put it, a new company looking to enter the sector would probably need to raise about $1bn if it wanted a realistic chance of success. That is almost certainly an exaggeration, but not a massive one.

This got me thinking about how viable it really is to set up a company in the FX/CFD sector today without raising substantial amounts of money from investors. Looking at capital requirements and regulatory costs, there’s an argument to be made that you shouldn’t set up a broker unless you have solid financial backing.

But the reality is there are still lots of people that want to try their hand at setting up a broker and not everyone can access a large amount of capital, so there will probably continue to be smaller companies entering the sector. It’s also worth keeping in mind that many companies that are large and respectable today, weren’t really in that position when they started out. IG Group, for instance, almost went bust in the late 1970s and was only kept afloat by its founder winning £600 playing bridge.

To my mind there are probably three key areas to consider here – regulation, technology and onboarding customers, although I do appreciate there is much more to consider when setting up a broker.

With regard to the first, we’ve all enjoyed having a good laugh at companies going to far flung corners of the earth to get regulated and then pretending it has any purpose other than bypassing regulatory restrictions in other jurisdictions (“yea man, I mean St Vincent and the Grenadines has a really burgeoning tech scene”). For a smaller player in the market though, these sorts of regions can often be the only places that are accessible to them.  

The problem here seems more reputational than practical. As a lot of dishonest players do go offshore, you have to contend with the perception that you may be one of them. Conversely you also lose the brand power that comes with saying you are regulated in somewhere like the UK.

However, it’s worth keeping in mind that there is no reason to stay offshore if your business succeeds. As one executive in the sector told me recently, start up brokers that intend to actually run legitimate operations tend to have the long-term goal of growing their business offshore initially and then, either via acquisitions or direct applications, getting licenced in a more respectable jurisdiction.

Incidentally, this is not a new phenomenon. There are some major brokers today that started offshore and then moved to acquire UK/EU licensing. At the same time, since 2018’s regulatory restrictions came into play, there have been plenty of ‘respectable’ brokers acquiring offshore licensing and then funnelling clients to that entity – so maybe you don’t need to go ‘onshore’ at all?

Next we have the tech question. Again, assuming you don’t have a lot of money behind you then you probably aren’t going to build your own trading platform. Until recently, MetaTrader was the go-to option for companies starting out. Although there were difficulties in acquiring a white label from MetaQuotes, this author understands that demand continued to be strong and it was nearly always the platform startup brokers wanted from tech providers.

However, this has changed since MetaQuotes stopped issuing white labels in September. It’s plausible this will be reversed in the future but assuming the restrictions on white labels remain stringent, this means it remains difficult for start up brokers to access either MT4 or MT5 in the near term.

Speaking to people at the FMLS evening drinks a couple of weeks ago, it seems like Match Trader and cTrader have been the primary beneficiaries of these developments. However, it wouldn’t be surprising if most tech providers saw a burst of interest after the events involving MetaQuotes unravelled earlier this year. Whatever the outcome is, it seems as though the technology choice for a start up broker is much less obvious for brokers today than it was a few years ago.

Finally we have the question of how to actually onboard clients. Getting clients directly is the best outcome but this is a very competitive market and it’s hard to do. Beyond some generic SEO efforts or some kind of cheap but effective marketing (does that exist?) it’s hard to see how this can be done.

The result seems to be that brokers then end up relying on IBs to get clients. This is not ideal. When I spoke to Drew Niv a couple of weeks ago, he said that close to 100% of FXCM’s problems when he was running the company were the result of using IBs. We’ve also looked at the problems IBs can cause here before.

Unfortunately the eternally hated IB / affiliate seems like he will remain in play because there aren’t really viable alternatives for brokers that are just starting out. I’m happy to get any hate mail saying otherwise.

Capital.com continues to hire IG Group people

In the last issue of CFDs Weekly, we looked at the stream of people from IG Group who were joining Capital.com. After that I went on holiday for two weeks and now I come back and see that it’s still going on.

Since the last CFDs Weekly issue went out, Capital.com have hired Andy Francos, formerly head of SEO at IG, as their Head of Commercial Marketing. They’ve also hired Greg Adams, who was Head of Risk Assurance at IG and spent almost two decades at the company, as Head of Risk.

When will it end?

capital.com startups
Previous ArticleMake FX Great again, with Drew Niv
Next Article An interview with IG Index’s first employee

Related Posts

Will AI kill forex broker affiliates?

June 30, 2025

Capital.com joins Innovate Finance and the London Chamber of Commerce and Industry

June 30, 2025

Capital.com adds $1m insurance for European clients

June 26, 2025
Add A Comment

Comments are closed.

Latest News

CME Group hires Neil Pabari as Head of APAC Retail Sales and Distribution

Institutional trading July 4, 2025

Panbari joins CME Group after almost 14 years at LSEG Data and Analytics. CME is pushing more non-US retail brokers to add ETDs trading.

Alpha Prime, diamond dealers, and Million Dollar Traders

July 4, 2025

TradingPRO officially launches prop trading arm TradingPLUS

July 4, 2025
YouTube LinkedIn WhatsApp
  • News
    • Newsletters
    • Interviews
    • Broker News
    • Tech News
    • Guest Posts
  • Learn
    • Start a broker
    • FX CFD Licensing
    • Liquidity
  • About
    • What is TradeInformer
    • Who runs TradeInformer?
    • Contact
    • Terms and Conditions
    • Privacy Policy
  • Follow
    • LinkedIn
    • YouTube
    • WhatsApp
© 2025 TradeInformer

Type above and press Enter to search. Press Esc to cancel.

Ad Blocker Enabled!
Ad Blocker Enabled!
Our website is made possible by displaying online advertisements to our visitors. Please support us by disabling your Ad Blocker.