On November 14-15th, during London Summit’17, UpTrader will be presenting a new project called Serenity. The initiative represents the first blockchain-secured marketplace for Forex, that is developed alongside with Grand Capital and a number of other companies. Stanislav Vaneev, CEO of Grand Capital and founder of UpTrader and Serenity Financial spoke to Finance Magnates about the problems addressed by Serenity and how it will affect the industry.

Indeed, the worldwide retail financial market is huge and keeps rapidly growing. The latest research has revealed that there are over 6,000 retail forex brokers worldwide. However, the vast majority of them are unregulated offshore companies or their regulation is not recognized in EEA, US, Asia or by other financial regulatory bodies.

Lingering issues

These companies, being mostly diligent market participants, face a lot of issues with banks, payment services providers, and liquidity providers, collectively suffering difficulties with marketing and promotion in certain jurisdictions. Their clients often experience trust issues when choosing a broker to trade with. However, despite all that, the services of offshore companies are highly demanded by the customers worldwide.

There are several reasons for that. Mostly because such brokers are far more competitive and offer better quality services than offered by regulated firms. KYC procedures are faster, the approach to the customer is more flexible.

The number of active traders exceeds a number of 100 million people. It is this high pool of traders that served as the genesis of Serenity. Potentially upwards of 80-90% of these individuals are not fully protected, laying the framework for a comprehensive marketplace that will aim to help bring a new level of transparency, and effective protection for traders to the market. In this sense, Serenity will help install a level that in some ways is higher than with fully regulated and licensed brokers.

Are you protected?

Regulation and licensing does not offer customers a full level of protection. It builds barriers for brokers to enter the market, and offers some sort of customer protection. We often see that regulated brokers fail and how this affects their clients.

Almost none of the recognized regulatory bodies are able provide customers with full protection of their funds. They do not have sufficient control mechanisms to instantly prevent pricing manipulation, breach of best execution rules, or even bankruptcy of a regulated broker.

We all have seen big names in EEA and US going down in past several years. Swiss National Bank (SNB) decision to remove its currency peg to the Euro in 2015 has proven that customer funds were not fully protected in regulated firms. A big number of regulated brokers went broke and their customers could only hope for some small repayments of theirs funds out of the compensation fund. And after that they had wait for years to get their money after bankruptcy procedures finish.

Introducing Serenity

Serenity Financial is totally new and different mechanism for the brokers and more importantly for traders. It is a marketplace based on blockchain technology and smart contracts operating in a smooth and simplified fashion.

It is designed to prevent fraud, protect traders’ funds from being stolen or taken as a result of price manipulation. Serenity will ensure that trading is being done at fair market prices. It has a quote verifying mechanism that match trades with worldwide markets.

Traders can choose a broker to trade with from a hundreds of registered firms. Before that, Serenity will undertake all necessary KYC (Know Your Client) procedures for each client registering with the system. It will be done only once and if a Client decides to move to another participating broker he will only need to transfer his funds. No additional registration and paperwork will be necessary.

Smart contracts are designed in such a way so that broker cannot use clients fund in any other way than a margin for trading. And withdrawal of the client funds can be done only upon clients request and will be processed by Serenity Financial.

In a case when client files a complaint against the broker, Serenity arbitration committee will define whether a trade was done at a market price according to market conditions or a broker should amend, cancel the trade or compensate the money to the Client. All decisions of the committee are binding to the brokers and can be enforced by Serenity using the smart contracts.

Brokers participating at Serenity marketplace will benefit from Serenity to start providing their services promptly. There will be a select of Prime of Prime liquidity providers registered with Serenity to choose from.

Serenity Financial resolves a problem of trust for offshore brokers and their clients but also offers new possibilities for regulated brokerage houses. This is also a part of our strategy and the group is inviting all recognized and regulated brokers into the system.

Any existing broker can join Serenity without changing its business model. The broker can add a Serenity account type to its existing products, integrate it into its systems and start accepting new clientele rapidly.