The foreign exchange market’s largesse and Over-the-Counter (OTC) nature has provided greater accessibility for clients but unfortunately has also attracted unscrupulous brokers who take advantage of absent regulation in some regions to offer their clients below par services at best or compromised trading conditions at worst.
The amount of Forex ‘scams’ has also ballooned alongside more brokers, more active clients and greater accessibility for all market participants. It’s no wonder skepticism of Forex companies remains high – an absence of globally standardized regulation and fairly low barriers to entry has incentivised non-transparency in the Forex industry as a whole. In shark infested waters it helps to have a boat.
An Honorable Cause
A company called ‘Forex Nation’, operating in partnership under a Whilte-Label agreement with ‘First Prudential Markets’ based in Sydney, Australia, are offering their clients something that no other FX broker has done before: the option of donating all company profits generated from clients’ spread/commission fees to worthy charitable causes across the globe.
Clients even obtain voting rights as to which project will be funded and to what degree. “Every trade our clients do helps us to build a better future for the planet,” says Forex Nation’s Founder, Danielle Lehrer.
Forex Nation is the first and only broker to be registered as a charity by the ‘Australian Charities and Non-for-Profits Commission’ (ACNC) whilst simultaneously holding an active ‘Australian Securities & Investments Commission’ (ASIC) license allowing the company to offer various financial services in Australia.
Although the company offers its services globally it does exclude US-based clients for compliance reasons. The company’s website states: “Our brokerage profits are put to work funding amenities, education programs and other charitable works that help people and enrich communities in need.”
A major project currently being pursued by the broker is helping developing countries improve their rates of development by empowering women living there. A recently launched initiative works with a non-profit organization called ‘Kiva’, specialized in providing small loans of as little as $25 to people in developing countries via micro-transactions.
A Moral Evolution
Forex Nation does not want to be classified as just a standard broker with a charitable side. The company’s Founder and ‘Imagineer’, Danielle Lehrer, sees the company as a sorely needed evolution of a currently archaic and distorted financial services industry that does not serve the interests of its clients as a whole. “People are tired of being fleeced by Prop desks. We operate on an A-book only model as a principle, because we wholeheartedly believe in helping clients obtain a transparent trading experience.”
In a candid interview with Forex Magnates, Ms. Lehrer confirmed that Forex Nation was previously partnered with AxiCorp but due to Axi’s “inability to guarantee only A-book execution without exception, Forex Nation had no choice but to find an alternative business partner that could.”
Ms. Lehrer’s vision is not to merely introduce a layer of transparency but rather to make every existing layer of a brokerage transparent as an example for other market participants. And over time, nurture a more community-based way of participating in trading. The ambition is to help the financial industry’s modus operandi to evolve by making everything transparent from the ground up.
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“Forex Nation aims to educate and empower its clients regarding the realities of the Trading industry… shedding light on some of the false perceptions many newcomers have when they start trading,” she says. “We want to take a holistic approach with honest dialogue underlining all client contact.”
An FX industry rarity – but a core part of Forex Nation’s business model is introducing a new era of operational transparency in the industry by publishing its total customer tally, total funds on account, its total Charitable Trust balance, as well as unredacted company accounts directly on its website including intimate details of the company’s staffing, operations and cost structure.
As the founder and visionary, Ms. Lehrer identifies three core principles that guide Forex Nation’s operations. Community not competition; transparent (non-predatory) business practice and sharing wealth to help others.
According to Ms. Lehrer, Forex Nation wants to “tune-in to underlying consumer sentiment so grossly affected by the Global Financial Crisis (GFC) and help to redefine people’s perception of success as being less about shareholder profits and more about the wellness of our global communities.”
Opening new frontiers has not been easy. Since its inception in 2013, the company has been pushing to complete the exhaustive list of required administrative and technical requirements, including licensing and logistical preparations. “ASIC and the Australian Taxation Office (ATO) see us as a square peg in a round hole because our business model does not fit existing legislation. With all the administrative processes now settled we are looking to move forward via client acquisition and building partnerships globally,” said Ms. Lehrer.
Having obtained its ASIC license in April 2013, Forex Nation went on to obtain its ACNC license in September 2013. The company now offers its client access to FX/CFD markets via MetaTrader 4 but is also considering the utilization of other trading platforms in the near future. At the current time Forex Nation is partnering with First Prudential Markets (FP Markets) which provides the company’s trading technology and infrastructure.
FP Markets offers clients a range of professional services including LMAX Exchange liquidity, Equinix NY4 & LD4 servers and spreads as low as zero. From a trading cost perspective, Forex Nation charges commission of $3.50 total per $100,000 traded (1 lot) for their Pro level clients at the time of writing.
As of August 2014, the company has been seeking to further expand by adding two experienced executives to its Management team. Daniel Byrne as CEO, and Peter Armstrong as Head Trader, joined Forex Nation on August 1st and are leading the company’s expansion.
Both have extensive experience in the trading arena and both share the Founder’s vision of professional, transparent services that benefit the wider community.
There Will Always Be Skeptics
The philanthropic nature and humanitarian vision of Forex Nation’s Founder raises some interesting questions, and it would be interesting to see if such an inclination will necessarily lead to more client security and safety. Does the fact that all profits from fees and commissions go to charity rather than shareholders means the company can offer genuinely ‘fairer’ trading conditions for both retail and institutional traders? And will this charity-based model be repeated by other brokers and possibly encompass other financial services as a proof of concept?
Answers will only emerge after the company has had a chance to implement its strategy over time, considering that such a business model has never been tried in the FX industry before. One way or another, Forex Magnates will keep an eye on how this intriguing new market niche develops.