Interest in cryptocurrency trading continues to grow around the industry with brokerages adopting these instruments on their respective platforms en masse. Having just added bitcoin contracts-for-difference (CFDs) to its own offering, ADS Securities’ Managing Director and Global Head of Sales, Mathieu Ghanem talks about client interest and future offerings.
Earlier this week, ADS Securities become one of the first brokerages to introduce bitcoin CFD trading in the Middle East and North African (MENA) region via its MT4 platform. Finance Magnates (FM) spoke with Mr. Ghanem who touched on ADS’ future plans as well as the build up to its own cryptocurrency offering in light of growing demand.
Is the addition of cryptocurrency assets corresponding to your client’s demand, or looking around at the crypto boom?
We have been tracking the development of cryptocurrencies over the last few years. The demand for us to offer them has always been there, but before bringing them onto our platform we wanted to be sure that we had everything in place to provide our clients with a reliable and safe service.
— CoinDesk (@coindesk) September 5, 2017
Are you aiming for diversification for existing clients or acquisition of cryptocurrency aficionados?
The important word is diversification. We work with our clients to encourage them to have diversified investment strategies and cryptocurrencies being uncorrelated with the main markets is a great opportunity to achieve this. Cryptocurrencies also offer good volatility and therefore trading opportunities, but these need to be carefully managed with the right controls and systems in place.
What are the characteristics of the Arab market for cryptocurrency trading?
The Arab market is often misunderstood. Our investors like to be early adopters and have first mover advantage but for a product like cryptocurrencies, they also need to see how they perform.
There has been a lot of interest in the MENA market, but as with all other products, our clients like to be confident they understand how to get value from the trades. They want to understand and prepare for any unexpected volatility. To be able to provide this advice we have to have a very high level of customer service.
We have trained account managers who are available to talk through the product in detail, or actually meet our clients face-to-face. From these meetings we also know that traders, looking at a new product, want to work with a well-capitalized counterparty with robust regulatory systems, again areas we are very strong in.
What are the pros and cons of trading cryptocurrency versus actually buying them?
Cryptocurrencies generally behave like other currencies but there are distinct differences. The major difference is that to hold digital currencies you need to have set-up a virtual ‘wallet’ – but this can be a slow and lengthy process.
For our traders this can all be done through their ADS Securities Prime account. Some investors will want to actually hold the digital currency but for traders looking to use bitcoin as part of their investment strategy we would recommend using a CFD product.
When you open a bitcoin CFD position, rather than taking actual ownership of the bitcoins, you essentially trade on whether the price of the bitcoins will rise or fall in value in relation to the US dollar. So this gives clients the opportunity to make profits when the value of the bitcoins is going down, essential short sell, which is not an option if they trade through an exchange.
Another positive for accessing digital currencies through a broker is trading security, as well as ease of access to 24-hour customer support 6 days of the week. There are also growing concerns over hacking when working through a cryptocurrency exchange, as you trade a CFD directly with us this risk is minimized.
It can also be complicated to calculate your overall market exposure, especially if you are working across a number of different asset classes. At ADS Securities we provide state of the art trading platforms via desktop or mobile where all of this is done for you.
How will you provide liquidity or pricing for cryptocurrency assets?
One of the reasons we have not rushed to introduce bitcoin was that we wanted to be sure we could provide the liquidity, and as with the other fiat currencies we offer, provide very competitive pricing and leverage.
In today’s trading environment our clients know that our high level of capitalization and market-leading technology, with risk management tools and multiple order types, means they are able to better manage the exposures in their portfolio than with a digital exchange.
Often very aggressive pricing by brokers can only be achieved by taking on extremely high levels of risk, this is not our approach. We will always look to offer traders a very good price and liquidity, and they can be confident that they are trading with a secure and professional partner.
Which assets are you planning to add?
We are continually assessing the market and actively looking at other cryptocurrencies which can be added to our CFD offering.