ForexTime Limited, the CySEC-regulated arm of Andrey Dashin’s FXTM brand, is ceasing its services to retail investors in Europe, effective February 26, 2021.
The reason why FXTM decided to suspend its retail business happens to be quite straightforward. The Cypriot entity sent emails to clients explaining that as of this date it will provide its services in the EEA region exclusively for professional clients and institutional traders.
In light of internal business decisions to focus on other markets and grow their B2B operations, many forex brokers, like Exness, decided to close the retail business in EU/EEA, including the UK.
One of the reasons stated for the exclusive focus on the institutional business is the recent changes in the regulatory environment. Indeed, the retail FX market in Europe is becoming relatively challenging, which is why many brokers are looking into new opportunities in the wholesale liquidity and clearing market.
FXTM’s EU website also dropped the option of onboarding retail traders and is now only taking professional clients.
ESMA’s restrictions have already had a more severe impact than most retail brokers anticipated, though it was offset by a surge in crypto volumes over the past two years. For instance, the European regulator has banned any welcome bonuses or other incentives that encourage clients to trade CFDs. This was problematic for many firms who often rely on such bonuses and high leverage as a means of attracting clients.
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Additionally, the trend towards zero-fee brokerage was a major concern with stock heavily-focused platforms booking a reduced but still significant proportion of its revenue from brokerage commissions.
However, other brokers, like Polish firm XTB, said while their business was particularly vulnerable to this shake-up, they see a unique opportunity to gain market share, with the recent regulations creating a more level playing field for competition.
A natural consequence of ESMA’s rules was a wave of consolidation in the market, allowing some platforms to grow its market share in the European market.
Meanwhile, ForexTime has seemingly preferred to expand its retail offering outside of Europe. The company has recently secured an FX brokerage license in Kenya. This approach further proves that ESMA’s efforts to protect retail traders have done anything other than push business offshore.
The new African entity is part of Exinity Group, which was launched in 2019 by entrepreneur, Andrey Dashin. The group is chaired by FXTM Co-founder, Olga Rybalkina and is comprised of the various retail businesses owned by Dashin, which includes Alpari International, ForexTime (FXTM) and the new brand in Nairobi.