Bulbrokers Interview: A Closer Look At Bulgarian FX

For a country with a no local futures trading, the Bulgarian forex industry is surprisingly robust. One of the factors driving the appeal of forex trading in Bulgaria is the growth of new brokers being created in the country. Taking advantage of Bulgaria’s inclusion in the EU and its low fixed and variable costs, brokers are setting up shop in the country. As such, while many of these brokers have their eyes on marketing towards the entire EU, the existence of thriving local industry raised overall awareness of forex trading in Bulgaria.

With much of the forex industry being familiar with DeltaStock, the largest Bulgarian broker, Forex Magnates took a look at lesser known Bulbrokers which is also steadily growing its business beyond its country’s borders. The following is an interview with Kiril Garchev, Head of Treasury at Bulbrokers.

Please tell us a little about yourself and Bulbrokers for our readers

Kiril Garchev, Head of Treasury, Bulbrokers

Bulbrokers entered FX/CFD business at 2007 acquiring STS Finance – one of the first forexbrokers in Bulgaria. Since then, our brand is widely recognized in the country as well as Romania and Macedonia. STS Finance was among the “early birds” offering the most popular Trading Platform in the world- Meta Trader 4, of course the beginning was set via the MT3 edition at 2003. My involvement with the financial markets began at 2000 working as a Dealer for several Investment intermediaries. I joined the FX derivatives team at STS Finance in 2005 and assumed the position Head of Treasury at Bulbrokers after the merger.

What is your product portfolio? Apart from forex trading you also offer other products, what are they?

We have a well diversified portfolio of OTC and exchange traded products. Despite the fact that our main revenue stream comes from foreign exchange we offer CFDs on indexes, stocks and commodities. Bulbrokers was the first broker in the world to offer trading of Bulgarian Stock Exchange listed stocks on the MT4 platform. Our product mix however does not stop short of the world biggest regulated markets – for more than 7 years our customers have had access to the most of the developed stocks and commodities exchanges around the world. We have a long standing partnership with Interactive Brokers, so we were able to provide trading of stock, options, futures, ETFs , future options and fixed income instruments from a single account.

Within forex trading, are you a market maker or do you use an ECN network?

Until now our MT4 offering was centered on market making, fixed spreads and so called instant execution methodology. That was the service clients required from us. The ECN framework is a great channel to offer valuable service, however not necessarily better than market making model. In fact we have seen one of the industry leaders turning back to a market making. Our understanding is that both market making and ECN frameworks have their own merits depending on the customers. Furthermore, we believe our customers themselves are coming closely to that conclusion.

We see a gradual evolution of the forex industry in Eastern and Central Europe. Bulgaria as a former member of ‘East Block’ may have similar experiences as others.

Tell us how the forex market looks like in Bulgaria – on what level it is now. How popular it is and when it all started?

The early 90’s brought fast and deep changes in our economic and political life. Bulgaria had its own economic crisis during 1996 & 1997, but on the other hand all that cleared the way for the benefits of the market economy. As such retail forex trading began to gain popularity roughly in line with the countries in the developed world. Now FX is one of the most competitive industries in the country. Here you can find not only Bulgarian companies but the presence of US and UK brokers as well as white label offerings of the global leaders. So FX/CFD business is highly competitive and Bulgarian customers are among the best served in the world.

What about regulatory environment in Bulgaria? Is the forex industry and forex trading fully regulated?

Absolutely, during the admission process of Bulgaria becoming a member of the EU several years ago, our legislation was tightly harmonized which in turn makes the financial industry in the country highly regulated. Apart from banks, licensed financial intermediaries are the entities that are authorized to offer foreign exchange services for retail customers. Business is supervised by the Bulgarian National Bank as well as Financial Supervision Commission, therefore, customers have nothing more to desire concerning regulation.

You write on your website about three licenses – Bulgarian, Romanian and FSA(UK). Why British license? Are you planning appearance in other countries than neighboring Romania?

As I’ve mention before, the Bulgarian market is highly competitive and on the other hand rather small in terms of customer base. So the only way to expand our business is via international activities. A natural area for us to start with was the expansion to the surrounding former Eastern Bloc countries. These markets aren’t as saturated as Bulgaria. In order to do so however we had to have appropriate regulation in addition to having a recognizable brand. Therefore, our international presence required steps such as well acquiring the well known benchmark of FSA (UK) registration. Looking forward, our target areas move to Central Europe as well the Western European markets.

How do you see evolution of forex market in Bulgaria, in next 5 years? Where it is heading?

Major trends that develop in our country are in complete harmony with what you know about FX market in Europe. No doubt competition is going to be fierce and product development key for the success. I see a small space for new entrants in the market but not so restrained opportunities for outsourcing supporting activities.

Can you tell us a bit about your plans for future? What can Bulbroker’s customers expect in the near future?

Our business activities in the near term are centered on developing a project with one of the worlds top 5 FX banks. Our goal is to offer customers the best of two services: trading via the MT4 platform in addition to interbank spreads and execution. As you know, FX now is all about execution and overall trading experience. With the new service our clients will receive institutional feed within the MT4 platform as well as first class execution that matches the best practices in the industry. Clients will enjoy the tightest flexible spreads available by the biggest Liquidity providers, no requotes and great speed of execution. We believe this new service will match requirements of much wider customer base in the same time retaining our existing clients that require fixed spreads and an instant execution model.