eToro’s James Hughes Talks Social Broking Capabilities, 2015 Strategy

James Hughes, eToro's Chief Market Analyst, provides a glance into the company's 2015 ambitions and utilities offered to clients.

Finance Magnates spoke with James Hughes, Chief Market Analyst at eToro, for his perspective on the number of personnel developments at the broker, along with the firm’s social capabilities. His in depth interview can be read in full below.

1. Can you describe some of the personnel moves at eToro lately? Is this part of a broader trend?

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It’s been a pretty crazy start of the year. There is a real impetus for eToro to grow and as a company it has been growing pretty massively for the past few years or so. What we want to do is grow organically in London as well, namely push the operation in terms of what we can do in UK.

Overall, the UK is still our largest area – that’s where our clients are and that’s where our presence will be largest. The idea is to build up the office there and bolster our presence here in UK. Alternatively, there has also been a lot of growth in Tel Aviv, though despite obvious leaps in technology we still are aiming to have a larger operation in the UK as it’s the financial capital of the world.

When I came to eToro there were a lot of clients and users, now we have around four million users on the OpenBook, which is an absolutely massive number. Taken together, that access and many people wanting to use what we are creating, necessitates more personnel. Our operations are dynamic and we have to move and grow with the times and this is ultimately the next step to be taken. At the end of the day, I think eToro can revolutionize the stagnant industry.

James Hughes, Chief Market Analyst, eToro
James Hughes, Chief Market Analyst, eToro

2. In what ways can eToro revolutionize the industry?

One area is definitely in the social and copy side of things. This is what the industry has been crying out for, for some time. I have been in the retail trading industry for thirteen years, and in that time I’ve seen things changed and crises come and go in terms of the markets.

In addition, platforms change, etc. however, what we have at the moment with eToro is that one thing has never changed from our client’s view. They want their hand held, i.e. they want insight in what to trade and how to trade it.

Of course, the majority of brokers won’t tell you this, after all they can’t. eToro does not have the advisory licenses to give that advice as specific as buy this or sell that, but we do have a four million strong community. As such, you have one aggregate unit to help clients or traders out, think the same way as others and in turn want to make same decisions as what others have.

The ability to have the answers already in the community from likeminded people thinking in unison is something that clients have wanted for a long time. A lot of brokers will tell you that their business is trader against the broker, almost like playing against the house with a casino, or that it’s a case of a broker making money versus the trader. However, this is generalizing and a lot of this view is not true, as most brokers want you to have money in your account.

Moreover, what this does in terms of copy aspects and what goes on in this space ultimately doesn’t matter in eToro’s point of view. We want successful traders and everything at eToro is geared to clients doing well and getting enjoyment out of this experience. We believe this is revolutionary in this industry having tried so hard to implement such views.

The opportunity I have is that we want to build the eToro name to be bigger and have a new trading platform, which is being launched later this year. However, we have a great platform and a whole host of likeminded individuals within the community that want to help each other.

We have the opportunity to take the industry by storm and honestly I am surprised this hasn’t happened before. The industry is in a hiatus – it doesn’t know which way to go in term of regulation, or post the Swiss National Banking event and there will be regulatory headwinds via leverage. Looking over the entire industry, there are big and smaller players and nobody is making an impact and nobody has been doing anything different.

3. How active do you expect to be on eToro’s network since it is a social broker and in what ways does it operate differently than Alpari?

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I think as a sheer number standpoint, given users and clients in the network, we have the ability to be incredibly powerful in this area. The key thing about what we do is not the platform itself, which is our selling point to what eToro does, but rather our clients. The people run it and are at the center at what the company does and what the company needs. Without clients constantly incoming and growing there won’t be the impact.

I think there will be a big move and big impact, namely in the UK. We already have clients and users in terms of the UK and Europe; of course these are the biggest places for us. However, we want to aggressively implement some PR and marketing behind our plans and for people to know what we do. This will serve to educate and build our brand, i.e. sustain and continue to keep growing and make a mark with our prospective client base.

At Alpari UK, I would look at other brokers and say to myself why would I open an account at Alpari UK when I could open an account elsewhere? Is there a reason? After all, everyone uses Mt4. The platform was the only difference and the platforms do the same thing. At eToro, our platform draws on a community four million strong.

Still, there has to be a balance of social trading and copying – there has to be a trading broker and trading company not just a social broker. What is requisite is that we have a symbiotic social component and trading platform.

The good thing with Alpari UK is that we realized there were problems and that through introspection we realized what we could to do improve user experiences. We also realized, unfortunately too late, that we needed to implement changes to maintain ourselves in that respect. The tragedy of the timing was that Alpari UK was at the peak of its business prior to the insolvency for we were definitely moving in the right direction. 

4. Will you be engaging with users directly, answering their questions?

Yes, a big part of what we do is boosting the profile of eToro in the media, etc., but also to be helpful to the community itself. This is at the heart of what eToro stands for, the community.

Everything at eToro is about transparency and my OpenBook profile is my trading account for example. I will be putting my own opinions, market opinions, etc., though not trading tips from a compliance point of view. Ultimately, we want to help out people who have questions and what to trade.

Sometimes it’s not even questions, but rather people wanting confirmation that what they are doing is the right or wrong thing and that’s what we are out the to do, and sharing ideas. My account on OpenBook is just another user on this social network and I want more help as we all want to grow. If what I do is not good or people don’t like it then they won’t follow me – it’s organic and if I do what people want then people will follow me the community.

5. Can you give any details about eToro’s prospective launch of a new version of its OpenBook platform?

The key thing and major goal is the launch of our new platform. The OpenBook and social platforms are two separate entities. The new eToro launch will bring everything together, i.e. copytrading, trading platform, everything in under one roof. We have developed things like charting, watch lists, other analytical tools, reliability, and what is within the platform.

We have put these two platforms together ultimately, and you have at your disposal utilities form both sides. This is the key driver, to get this launched and pushed. Additionally, our goal in 2015 is to let UK prospective clients know we are here.

We want the presence in the UK to be a big one, as it’s our biggest region. Financial companies or trading brokers, whomever they may be, the UK is the global nexus. We have to maintain and culture a big presence here, so this is another one of the goals.

Everyone knows eToro has the ability and software to shake this industry, and people thought this would happen before and for whatever reason it hasn’t materialized yet. Now there is, from top to bottom, at the company, a full backing to push this and never a better time to do this in the industry. Everyone is so worried about regulation and what is around the corner that there has never been a better opportunity to push something different.

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