AvaTrade CEO Daire Ferguson told Finance Magnates today that the company is looking to buy forex brokers and client books from brokerage firms, especially in Europe and emerging markets. Many of these brokers are trying to exit the market in the wake of new regulation from the European Securities and Markets Authority (ESMA).
The European regulator has clamped down on European brokers with tough new measures that will significantly reshape the trading industry. New rules include caps on maximum leverage trading, including a 1:30 ratio for forex and 1:20 ratio for commodities. Brokers will also have to publicly list how many of their clients lose money.
“Many companies see ESMA’s new regulation as the end of the road. We feel quite the opposite” said Ferguson. “AvaTrade sees it as an opportunity for expansion. Regulation is good for the business and good for AvaTrade”.
“Europe is a saturated market and has been for some time,” noted Ferguson. “However – Regulation, whilst perceived as tough or restrictive on business, gives clients the confidence to deal with a strong broker that embraces it and identifies this as a strategic alliance rather than a hindrance to future growth – and brings such businesses into the mainstream of the investments universe.”
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“We have significant experiences in acquisitions having done a number in the past. All our purchases will be conducted in a controlled manner.” Said Ferguson, “We have strict criteria based on our strategic plan and any acquisitions will need to provide us with added value such as an entrance into new markets or technology “.
Looking Beyond Europe
Ferguson also told Finance Magnates that AvaTrade is actively seeking regulatory approval in new jurisdictions. The company is looking to obtain licenses in Africa, the Middle East, and East Asia in order to tap into emerging markets.
Facebook and Google’s ban on cryptocurrency advertising has left a number of brokers in these emerging markets wanting to bring themselves under regulatory jurisdiction. Ferguson claimed that these brokers could help AvaTrade to set up new operations in those markets, while AvaTrade would enable them to work for a company with regulatory approval.
Beyond the ‘boots on the ground’ appeal that these brokers offer, emerging markets are becoming an attractive prospect for brokers like AvaTrade. Governmental initiatives encouraging the use of digital and mobile banking, especially in Africa and South East Asia, mean that these emerging markets are increasingly appealing to online brokerage firms.
“AvaTrade has always been strong in emerging markets,” said Ferguson, “but these have become an increased focus for us and we are putting significant resources into growing these markets”