The UK Financial Conduct Authority (FCA), along with other European regulators, has recently announced massive regulatory changes, including a recent clampdown on CFDs and spread betting providers. Shortly after proposing leverage limitations and other restrictions, the UK’s biggest listed brokers lost billions in value.
If we also take into account the Brexit saga, we should be wondering about the future of UK-based brokers.
Finance Magnates had the chance to hold an interview with Shoaib Abedi, Director and co-founder of ICM Capital, to get his take on this.What follows is the summary of our conversation.
ICM Capital is a multi-national forex and CFD trading company with headquarters in London, and offices in Europe, the Middle East and Asia. Since being founded, the firm has been authorized and regulated by the Financial Conduct Authority (FCA).
We last interviewed you in 2014. What innovations and new offerings have you launched since then, and are there any currently in development?
In the last few years, ICM Capital has invested in research and technology. Consequently, we are pleased to announce that we have had two fantastic consecutive financial years 2015 and 2016.
We have launched the ICM Direct platform which is actually an Electronic Communication Network (ECN) built in-house. This has allowed us to maximize profits from this flow without spending a fortune on the cost of external technologies. Besides this, we have also introduced an Institutional Platform specifically designed for other brokers, professional clients and hedge funds who would benefit from executing the flow without a last minute look or third-party technology delays. The institutional offering also includes MT4, MT5 and Vertex platform bridges. Consequently, B2B clients can simply connect to ICM Capital without spending themselves on external technology costs.
The UK, where you are authorised, has made massive regulatory changes since you started back in 2009, including a recent clampdown on CFDs and spread betting in particular. If we also take into account the Brexit saga, how do you see the future of UK-based brokers?
Our perception is that the future of UK based brokers continues to be strong. The very reason for this is because of the regulator. Clients gain a sense of comfort when signing up with a UK regulated broker because of the protection offered by the UK regulatory framework.
Somewhat more so with us, as we are one of the few brokers to provide clients with enhanced and extended protection of £1,000,000 via Lloyds of London.
The MiFID II framework – which comes into force in January 2018 – has gone through considerable reforms and will affect all EU-based forex operators. Even before that, European regulators were already tightening rules around trading in retail markets. Do you think smaller companies have gone to the wall because of the more rigorous operational standards, including higher minimum capital requirements?
This has actually been good for the market as it has been able to provide a level playing field. Brokers that have the minimum capital requirements are usually those that are secure and able to offer the level of service and products that the regulators expect.
Staying on the subject of regulation, can you give us some examples of how regulators can walk the fine line between over-regulating and sensible regulating?
Regulators exist to ensure not only are clients protected but those offering services do so within an appropriate framework. There may be a perception of over or under regulation, but whatever that is done, is done for the best interest of everyone involved.
Investments of FX and binary options companies in sport sponsorships is a global trend, but do you agree that the trend has begun to show signs of slowing down, at least in terms of big deals?
Sports sponsorship has always been a logical place to do a bit of marketing – whether it’s a favourite cricket team or a childhood football club, most of us tune in on a regular basis.
As sport has become increasingly easy to access through a variety of online channels, so too has the space on teams’ shirts, cars, bats, hats and rackets been taken up by brands engaging with sports sponsorship.
While some sponsorship deals for global teams such as Manchester City or Liverpool might be out of reach for most businesses deals and therefore may have experienced a slowdown, many others continue to thrive. Many companies within the forex space continue to sponsor everything from F1 racing teams to sports such as base jumping.
On the subject, ICM Capital haven’t been left behind either. We have been the proud sponsors of the England Polo team for the last two years.
It’s been nearly two years since you opened your office in Dubai. How has ICM Capital approached the Middle East market and are there any initiatives in the pipeline?
We are delighted to be in the Middle East. The Gulf is a key market for us and this success is a reflection of our efforts to provide the best trading experience for Middle Eastern traders that offers the full package – execution, speed, charting, education and transparency.
ICM Capital has developed leading edge execution technology and will continue to introduce tools for the modern day Middle Eastern trader, including a mobile app, advanced account analytics and our own proprietary client area.
What’s more is that we have been recognized as the number one FX broker for client satisfaction, education and research tools in the Middle East.
What advantages does the Middle East offer for retail FX firms from a retail client business perspective? Are there any specific needs for this region?
ICM Capital has offices, partners and affiliates in all the major financial centres in the world. With our local presence, we uniquely position ourselves to provide exceptional experience to traders wherever they may be. With our focus in this region, ICM Capital’s Middle Eastern clients can be assured of our world-class service and resources in Arabic. That’s what we believe a retail client in this region wants most. Service and products in a language they understand. Therefore, with ICM Capital, they have everything they need and nothing they don’t.
We noted a mixed trend regarding social trading platforms in the last few months. It seems that although some brokers are developing new products, more and more firms are putting their social features under review while others have entirely abandoned the offering. How do you see this crowded sector now and in the future?
We haven’t seen a demand for social trading and will review, should this change in the future.
Are there any parts of the business in which you see good opportunities for growth? And how are you positioning ICM Capital to take advantage of these particular opportunities?
ICM Capital sees great opportunities in the Institutional space. It is good to see that this market is naturally evolving through new client requests, without any additional spending on traditional marketing channels. We also see big improvements in the CFDs space including cash CFD offerings. This contributed a lot to the 2016 financial results. In order to successfully on-board and execute this business, ICM Capital has further improved its technology and support teams to streamline the B2B on-boarding process.
Can you share some operational metrics of ICM Capital with us? What are your primary revenue sources? How do these break down?
ICM Capital executed large volumes in first few months of the 2017 financial year. The numbers are really exciting and reflect our recent investments in new talent acquisition and improvements in IT, Sales, Marketing, Client Services and other departments. This has already resulted in record KPIs in terms of volumes and profitability. We hope to further improve our offerings and achieve even better results by the end of 2017 financial year.
What are ICM Capital’s plans for the rest of 2017 and beyond?
Besides naturally growing in GCC region where ICM Capital already built a well-known brand, we plan to expand in several strategic locations that include Asian and Latin American markets. We also plan to invest more in digital marketing space in order to expand across the globe and test new potential markets.
As for the medium-term plans ICM Capital has the potential to enter the top 10 global retail FX and CFD brokers, which of course would not stop us from further expansion and achieving even more exciting results.