With a population of only 1,318,000, you wouldn’t expect tiny Estonia to be much of a player in the global forex market. However, with such a small population, Estonian businesses are usually created with ambitions to market to much more than just the local market. This business philosophy is especially seen in the forex market, where Estonian brokers have achieved healthy growth beyond the boundaries of Estonia. The model example has been Admiral Markets. The Estonian broker has aggressively grown its business throughout Eastern Europe and the rest of the world. It currently has offices in 27 different countries.
Forex Magnates is launching a series of detailed country reports starting with Eastern Europe. The reports will become available shortly.
Another new Estonian broker that is quickly making a name for itself is Armada Markets. What separates Armada Markets from many new entrants in the forex markets is its claim of offering razor tight spreads with a full STP/DMA trading environment. The broker utilizes PrimeXM’s bridge technology for its MT4 platform and is hooked to LMAX Exchange’s liquidity. Forex Magnates recently met up with Armada Market’s CEO Ingmar Mattus to learn more about his company.
Tell us a bit about yourself and Armada Markets.
Armada entered the retail FX market in 2011 after many years of preparation. The company is partly-owned by financial advisory and proprietary commodity trading firm, Spada Capital. Most of our employees are either former employees or owners of Spada. Collectively, our management team has a long experience in the trading industry. I have personally traded stocks, commodities and FX since 1997. In the past I was the Head of Dealing of Admiral Markets, also an Estonian FX brokerage firm. For many years before that I was managing domestic and international relations for the Estonian Banking Association . In my heart I am a banker and hopefully Armada Markets will also grow to be an investment bank one day.
Let’s talk about how Armada Markets works. You write on your website that you offer STP/DMA trading. You also mention that you are working with both Boston Prime and LMAX Exchange. Can you tell us a bit more about Armada’s trading execution? Also, why LMAX/Boston Prime and not other solutions?
We are true believers in transparency and superior trade execution. Being a futures trader I got used to reliability and trust that surrounds the futures industry. This is something that we are going to spread into the retail FX world as well. So being a partner of LMAX is a must for us as both Armada and LMAX represent the next phase in the development of the FX industry. Boston and other liquidity providers serve us as backup liquidity providers.
The fundamental reasons that so many FX traders are unsuccessful in my opinion are; wide spreads, slow execution speed and broker interventions (requotes, rejects, spread manipulations). We have eliminated all of them. Every broker can do the same but very few choose to do so. So in that sense our approach is kind of revolutionary.
Tell us who your customers are. Where do you see the potential for Armada Markets? One could say that your low spreads attract large sized customers and professional traders, but on the other hand you have a very low initial deposit requirement and transaction size. Why is that?
Our average client has been trading for at least a few years and has quite extensive knowledge about what it takes to become successful and remain so. So yes, we attract more professional traders than newbies. Our initial deposit is low as we prefer our clients to test us first and then deposit more if they like our services. Our minimum accepted trade size is 0.01 standard lots because many professional traders have high-precision algos and they like to have micros enabled.
And who are your biggest competitors in the market and how do you differ? Where do you see your company in next 3 years?
Our competitors are all brokerage firms that provide trading with very low spreads and commissions, fast execution and no dealer interventions.
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Our client base is growing steadily and we have an extremely stable deposit base. So in the next three years we will continue to expand and add new instruments and liquidity; any products that clients have demanded. We are also working on the technology and regulatory front which means that our clients and the company will have a really exciting time ahead.
Who regulates Armada? What are your plans for international expansion?
We are one of those few brokers that publish everything about the company. Anybody going to our website can see who runs the company, where our office is located and what licenses we have. We are operating under the regulatory framework of Estonia, a member country of the European Union and Eurozone. We have a spot FX brokerage license from the Ministry of Economics (license nr VVT000289). Estonia and, to my knowledge, also Finland, Poland, Ireland and some other European Union countries do not classify spot forex instruments as securities, therefore the licensing falls under the jurisdiction of relevant agencies or ministries.
You state on your website that you offer the “new advanced MetaTrader4 PrimeXM trading platform.” What are differences between this and regular MT4?
We are using a solid PrimeXM MetaTrader4 trading software provided to us and managed by Swiss company PrimeXM. The front-end does not differ from any other MetaTrader platform. However, the real difference comes from trade flow management that is done by the bridge. I firmly believe that no other MT4 bridge currently offered in the market can compete with PrimeXM’s bridge. Our order handling speed is unquestionably the best as even our competitors have said so. This means that any client trading with Expert Advisors at high frequency would find a perfect environment at Armada Markets.
Forex market is constantly evolving. There are new brokers entering market almost each month. There is also trend in recent years to offer STP. In Armada’s view, how will the forex market evolve in next 5 years – in what direction?
We believe that the market is in a consolidation phase that will last some years. You can even see this on a broader scale as banks and large FCMs are trying to sustain profitability levels. This is the new standard.
The outcome of consolidation will be; better services and financially stronger brokerage firms. Competition has become harsh but it is good because clients ultimately benefit from it. I think in 5 years time fixed spreads will be gone and the majority of trades will be placed by algorithms as this is where the real value is created for traders.
What can customers expect from you in next 12 months? What are your development plans and how do you plan to keep on attracting customers?
We continue to provide superior execution service so clients expecting to profit from trading will ultimately end up opening accounts with us. We are happy to help anybody to succeed in trading.
We don’t like to talk about new developments until they happen, but you can be sure that we will be introducing some exciting features in the service and technology front in the next 12 months.
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