Eqlx, a trading name of regulated broker ACM Group Plc, has just shared with Finance Magnates that the group is going to launch a brand new broker business model. The company is aiming to bring full transparency to its clients by sharing its profits with its customer base. The firm will be reporting its results on a quarterly basis, thereby sharing with its clients its full financial performance.
According to the new model, the quarterly profits of Eqlx will be split with its active trading community 50/50. The company will use its trading volume in addition to the absolute profit/loss as variables to capture the trading activity of different clients and share its profits with the most active clients.
The exact amount of the client’s share will be calculated according the following formula:
The company reserves the right to deny net revenues sharing for those who look to abuse the system. Questionable activities such as hedging strategies and high volume strategies with a clear purpose to only take advantage of profits revenue would be considered attempts to manipulate the volume weight, therefore its users will be disqualified.
In addition to the distribution of profits, active clients will be shareholders. Eqlx will enhance transparency through offering a breakdown of costs, profit sharing, core rates, markups, revenue and expenses. Simply put, the company is willing to put everything on the table.
Matthew Carstens, CEO, and co-founder of eqlx, shared with Finance Magnates, “Brokers are like a black box. We are peeling back the curtain, allowing our clients to see exactly how much revenue we generate, how we generate it, and details on our expenses like actually what our core rates are — all this at a level not seen before. We believe this will change the dynamic between how a trader views their broker forever.”
“With this new level of transparency as a core tenant of ours, we are able to go a step further by treating our active traders as equals by actually valuing them on par with ourselves. We will literally be distributing 50% of any net profits of the company back to our fantastic group of active traders because we understand we are nothing without them,” he elaborated.
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In the following exclusive interview with Finance Magnates, the CEO & Co-Founder of eqlx, Matthew Carstens shared further details.
How do you intend to publicize the broker’s performance data – quarterly, annually?
Our performance will be published on a quarterly basis. People are use to this timeframe as publicly traded companies use this method. Furthermore, this keeps our focus on lifestyle traders who are more interested in exceptional pricing and execution on our 900+ instruments each day.
Aren’t you guys worried that this business model while seemingly attractive to clients can be damaging to the company’s in terms of lack of sufficient revenues/profits?
No, quite the contrary. We feel that our model finally provides an option where the trader and broker are aligned at a whole new level. We feel the company will scale nicely because of our service and execution and with everyone, broker and trader finally aligned on the same team each customer will turn into a brand advocate. We don’t have huge marketing budgets, or massive sales teams. Rather, a clean and lean experience with no conflict of interest, this is not available anywhere. This is eqlx.
Is eql trader your own solution or a white labelled product?
We don’t see any differentiation or value with the industry’s proprietary trading technology. Fancy marketing campaigns implying that yes, but anything remotely new gets copied by another broker in their next development sprint very quickly. In that sense we are platform agnostic to a large degree, and we would rather focus on how the collective makes money, execution quality, service and allow people to be part of this unique idea. We are very transparent with our customers. Technology across brokers is 99.9% the same. Materially there is no difference, so we run lean, outsource when it makes sense and focus on quality in places were we can make a difference. Service, execution, and in the end being apart of the same goal.
How do you see the FCA license going forward – do you think it will continue to be allowed passporting into the EU and do you have contingency plans to get another EU license in case Brexit negotiations don’t go well for the financial services industry?
This is still too early to tell exactly what is going to happen, but as things change leading up to it, we will determine what is best for the collective as a whole and position ourselves accordingly.