Asia expo shines a light on the future of forex

The retail forex industry is perpetually evolving as brokers adapt to changing demands from both clients and regulators alike. Given the combination of rapid growth and accommodative regulation, Asia is helping shape much of where the market goes next. As a result, the annual iFX Expo in Hong Kong is now seen as a firm fixture for many in the global derivatives industry. Andrew Wood, Business Development Manager for CMC Institutional in Asia Pacific travelled to the Expo at the start of the year. The event provides a forum for banks, brokerages and technology firms to share their ideas on the industry, the challenges it faces and where the sector is heading next. On his return, we asked Andrew for his take on where the market would likely go next.

First Published: e-Forex Magazine 85 / Market Commentary / March 2019

The industry, especially in Asia, has matured from a purely FX proposition
The industry, especially in Asia, has matured from a purely FX proposition

Across the two day event, we suspect there was no shortage of inspiration, but what would your key take away be?

AW - Demand for multi asset is growing, and quickly. The industry, especially in Asia, has matured from a purely FX proposition – and why not? Forex is a fast moving, liquid market that provides both volatility and trading opportunities for clients. It’s easily relatable too, with any potential retail client being well accustomed to multi-currency transactions. However, the demand here is changing. Whether that’s because of the volatility that has been sapped out of currency markets by extended periods of ultra-lax monetary policy or a desire to seek wider diversification was certainly debated, but the market is changing. Having a multi-asset liquidity provider is therefore going to be increasingly important when it comes to promoting services to clients in the future.

Andrew Wood
About Andrew Wood:
Andrew has responsibility for developing CMC’s Institutional Business for API, White Labels, Advisory Brokers and Funds in the Asia Pacific region, including managing the Institutional services team in Sydney. As an experienced business development manager in the financial services industry, Andrew has spent time working with a number of well-established global financial firms, both in London and Sydney. He is skilled in trading systems, derivatives, Foreign Exchange, software and API integration.

We heard a lot about Crypto trading a couple of years ago. Is this still proving popular in Asia or has the collapse in underlying prices changed the game here?

AW - The bitcoin mania that gripped many in 2017 was seen as instrumental in driving a fresh wave of interest into trading, but the rapid price reversal and growing cynicism over the quality of the underlying assets meant that many traders were left orphaned. One CEO’s opinion at the conference was that this corner of the market didn’t migrate into traditional FX or index products, but instead was hunting out opportunities to trade single stocks. That’s before we consider the fact that this market could still roar back to life – a 10% uptick in underlying BTC during February recently saw a renewed flurry of interest. Again, this insight suggests that there’s a lot of value in having a truly comprehensive multi-asset offering on the table if you’re wanting to stand out in Asia and adapt to changing  client demands.

Talking more generally, what’s happening with technology and can MT4 expect to remain dominant as a backbone for much of the retail FX market?

AW - Good question and one that certainly proved to be a popular talking point. Whether MT4 is a good execution platform was something that came up on more than one occasion and although some delegates were less than enthusiastic, given the phenomenal global success of the product, it’s difficult to imagine it disappearing any time soon. Even Metaquotes’ desire to see brokers migrate to MT5 is getting a lot of pushback. There is however a lot of new technology emerging in this space so will the quest to migrate to MT5 combined with new offerings from other providers allow MT4 to hold onto its crown? Regardless of that, given the scale of the current proposition, it seems likely that this mainstay platform will dominate the industry for a while yet.

The pace of evolution shows no signs of abating, but from what Andrew tells us, the commitment to move to a multi asset world is probably the most interesting single theme right now. Just how far this evolutionary path can go will likely only be limited by the scope of the liquidity providers themselves. Investors it seems are always willing to explore new markets with Crypto perhaps being the best example of that - so if competitive pricing is available then there’s little reason to believe this pattern won’t continue.