Retail broker BUX has been making big headlines over the past few months.
At the start of September, the Amsterdam-based firm launched Bux Zero – a commission-free equities trading platform. That service is separate to the firm’s existing CFD trading service, BUX X.
And in June the broker announced that it had raised $12.5 million in venture capital funds. Some of that cash was put towards acquiring the UK subsidiary of retail broker Ayondo.
To get a better understanding of BUX’s new equities platform and to see what the broker has planned for the future, we spoke to company founder and CEO Nick Bortot.
Prior to starting BUX in 2014, Bortot spent over a decade at BinckBank, a Dutch stockbroker that was acquired by Saxo Bank last month.
In our short conversation, we covered everything from the makeup of BUX’s client base to the benefits that the firm will accrue from the Ayondo acquisition.
How old is the average BUX user? My impression is that you are much more geared towards a younger audience. Assuming that’s the case, how do you go about targeting young people?
Correct – our users, as well as our target audience for BUX Zero is young. We like to refer to them as digital natives, so roughly between the ages of 18 to 35. We have a strong brand in the Netherlands, and our marketing for BUX X has always been a bit more cheeky, vibrant, and fun.
With the introduction of BUX Zero, we’re looking to speak to a much broader audience of digital natives, while still maintaining our mandate of making it simple for more people to easily do more with their money. While both BUX X and BUX Zero serve different purposes, both exist to demystify the complex world of finance.
Where are your clients based? Are you planning on moving into any new markets soon?
BUX X, our trading app, is currently available in 9 countries across Europe. Those countries include the Netherlands, Germany, Austria, France, UK, Spain, Italy, Sweden, and Denmark. We’re not excluding the idea of expanding beyond Europe; however, right now, we are focused on delivering apps that help Europeans do more with their money and becoming the go-to neo brokerage in Europe.
You recently acquired Ayondo’s UK subsidiary. What was the thought process behind that deal?
When we started BUX 5 years ago, we wanted to focus on building and marketing a great app. We didn’t want to spend all our resources worrying about admin and legal.
Therefore, we looked for a partner that could take care of the ‘backend’ [- Ayondo UK]. Since then, our revenues grew to 65% of [Ayondo UK’s] revenues. As we are more mature now and as we do the largest part of their revenues, the was a natural step to buy them.
This transaction gives BUX control over the full value chain, including the license, the technology, and the operations.
This will allow us to serve our customers even better and make it easier to introduce new features more quickly.
For a growing business like BUX, it would have been part of our plan down the road to acquire or build a firm like AML; this has just accelerated that timeline. This has presented an opportunity for us to take control and accelerate our growth.
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How negatively has BUX been affected by the product intervention measures introduced by ESMA last August?
In our opinion, the new regulations that ESMA has imposed have been good for the market. Rather than chilling it, we believe it is making room for more legitimate players and clearing out the more questionable ones. CFDs have many advantages, but some parties have misused them and have unfortunately painted the industry with a singular brush.
From our standpoint, we are happy to have the field cleared of those who do not have their customer’s best interests at heart.
You’ve just launched commission-free stock trading. Do you sell client order flow?
BUX receives no payment for order flow from market participants and providers of financial products. Orders are sent to a “smart order router,” which forwards them to the place where they are executed according to best execution principles.
You aren’t (yet) charging commission fees. What fees will you charge in the future, and what are your custodial fees like?
BUX Zero currently offers Market Orders and Limit Orders. Both order types are available commission-free until the end of this year. Next year, BUX Zero will introduce a third order type, the “Basic Order,” which will be commission-free forever. When users select this option, their orders will be executed at a fixed time, once a day. With the introduction of Basic Orders, BUX will start charging the rates below for other order types:
Basic Order: Free
Market Order: €1
Limit Order: €2
This will ensure that BUX Zero offers all users at least one order type to invest commission-free now and in the future. In parallel, BUX will also introduce a subscription plan. Users will have the option of paying a fixed monthly fee to get access to unlimited commission-free Market, Limit, and Basic Orders. The subscription fee will be lower than the commission of a single transaction at a traditional online broker.
Details of the subscription, including the price, are currently being tested among user groups and will be published as soon as the plan is made available.
Do you see BUX Zero as being a profitable business in the future, or do you see it more as a way to onboard clients to your CFD trading platform?
BUX Zero is not a way to cross-sell towards CFDs – otherwise, we would have offered both products in the same app.
BUX Zero is our next step in becoming the leading European platform for people who want to do more with their money. We started with speculative trading, are now adding investing through stocks and will add more products over the coming years.
Some of the standard MT4, CFD/FX brokers are finding it very difficult to add equities trading to their offering. Was it difficult for you to do too?
Yes, it was indeed quite difficult because it’s a completely different product! And we took it even one step further by investing the time to build our own back-end broker. This full-stack back-end will give us a great deal of flexibility, making our operations very cost-efficient and allowing us the ability to be nimble in rolling out new features.
Some of your competitors – eToro probably being the biggest and most similar – are starting to add access to other assets like cryptos and ETFs. I know you’ve probably had your hands full with bringing BUX Zero to market but do you plan on adding more asset classes, and I don’t mean CFDs, to market?
Yes, absolutely! While much of our efforts have been focused on getting BUX Zero to market, we’re busy working on getting additional assets and features developed for our BUX Zero users, including ETFs.