London held on to the top spot in the recent BIS FX Volumes Survey, however current textbooks used in MBA courses state that the world’s economic center of gravity is shifting to the east, with the Asia-Pacific region grabbing headlines of economic growth levels consistently above the 5% mark.
In the FX markets, despite Asia accounting for a large proportion of client inflows, London is still the dominant jurisdiction for brokers setting up shops, as they attempt to embark on their journey of global domination.
Forex Magnates’ London bureau can report that, Gulliver FX is one of the first broker-dealers to gain approval this year under the authority of the UK Financial Conduct Authority (FCA), in the FX and CFD sector. Gulliver FX Limited (Gulliver), is a subsidiary of Japanese giant, Yahoo Japan Corporation, the firm that owns broker, YJFX.
The move comes as no surprise to the industry, as the world’s most established market for FX trading faced uncertainty after dramatic changes by Japan’s financial watchdog in trading conditions offered to retail investors. The changes directly impacted capital requirements for open positions, thus reducing the amount of leverage traders can use to maintain orders. Like the reprisals that impacted the US market, where leverage and capital adequacy laws were deployed, Japan has thought to follow suit with brokers migrating to new lands.
Yahoo! Inc., a listed technology firm was founded by Jerry Yang and David Filo in the early 90’s, the company name is an acronym for ‘Yet Another Hierarchical Officious Oracle’ according to the firm’s media relations website. The team at Gulliver were brainstorming about a name that signifies the new steps taken by the group, and after months in the research lab the firm has decided on Gulliver, a simple name that is known to the average person through Gulliver’s Travels, and using to their advantage Yahoo, who was also a character in the story! But with no connection to the firm or its strategy.
The UK isn’t the easiest place to do business in, strict visa requirements, regulations and the bleak weather raise the bar. However its reputation is paramount, as ‘the be-all and end-all’ of global financial markets which consequently supersedes any issue or hurdle.
“The UK is the global hub for FX, its regulatory structure and framework is second to none and is regarded as a front-runner in dictating sound rules and legislation for our industry. In addition, the UK, due to its time zone and location, acts as an entry point into many new markets,” explained the firm’s director Mr. Shinya Takizawa, over lunch in a comment to Forex Magnates.
Gulliver FX Limited was incorporated in November 2012, with two directors Shinya Takizawa and Tomoyuki Tajikawa. The firm received its FCA regulation on the 2nd of January 2014 and offers Forex trading. The firm holds a matched-principal license, and routes orders back to its parent company. According to the FCA register the firm is: “Able to hold and control client money.”
London has been picking up the pieces after the US’s onslaught on FX trading post Dodd-Frank Act. To its delight, global players from as far as India, Indonesia and Japan have polished its ego by creating their European headquarters in the capital.
“London ticks all the boxes, reputation, infrastructure, regulation and not forgetting the quality of personnel,” explains Javed Raza, CEO of Silverstone & Co, in London’s Canary Wharf, an accountancy firm that specialises in servicing FX firms.
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“The more the merrier, let’s face it, the British economy hasn’t got a lot going for it outside finance!”
The UK is significantly over-broked, and competing in a fragmented marketplace is a difficult proposition. Mr Takizawa is here for the long run and is keen to start the firm’s journey in first gear, he describes their plans for the UK operation: “Although YJFX Inc is an established brand in the Japanese market, we appreciate that Gulliver FX is in its embryonic stages, basically a child, we only received our license in January.
We are gradually re-creating the mammoth that we have in Japan but in a slow and steady manner. We can learn from the current landscape and consequently create value for traders. Our immediate tasks are to get the ship in order; we are building our team, customising our technology and ensuring that each and every aspect of our offering is complete, from payments to on-boarding, from execution to after care.
Following this, we believe that within 18 months, we will have a firm grip on the market and can make the right decisions on the future growth and direction of the company, we are looking at a long-term plan for Gulliver.”
CyberAgent to YJFX
Apart from its new UK identity the firm firmly believes in a new strategy for YJFX and hence its new look and feel.
“CyberAgent FX was re-branded as YJFX Inc in 2014 due to the acquisition that took place a year ago. After the merger, one of the first goals for YJFX was to expand into the global market. However, due to the different regulatory structures and requirements between Japan and the rest of the world, a new company structure and different initiatives have to be put together to ensure the new business sets foot into the global arena firmly and successfully. As a result, the Gulliver FX brand was established in London and we are complying with the Financial Conduct Authority’s requirements as part of our regulated business,” added Mr. Takizawa.
As stated, Gulliver FX holds the matched-principal license type, a common step taken by firms that have an existing set-up and the parent firm is the main liquidity provider. The firm will offer its current product range with a few tweaks, however being backed by a technology giant they anticipate new solutions that suit the UK and European based trader.
Japanese brokers have benefited from the volatility in the yen, which has led to firms reporting record trading volumes as well as strong corporate earnings. Mr. Takizawa is bullish on the overall market and believes there is room for more growth in the world’s third largest economy: “Japan alone, is accountable for more than 30% growth and as Japan is one of the main drivers for the global forex market, we are optimistic that 2014 will yet again be a fruitful year for our industry.”
London has little or no competition in maintaining its role as the elite destination for financial services and specifically for the FX markets. The FCA reinforces its stance by its investigations on best execution and social trading. Forex Magnates expects a number of brokers to launch new operations in the capital including; Axi Trader and Divisa Capital. Watch this space!