myi: How much is the retail Forex market worth and what is the profile of people who trade FX?
The Foreign Exchange (Forex) Market is the world’s largest financial market with daily trading volumes in excess of $4 trillion. By contrast, the NYSE, the world’s largest equity market, has a daily trading volume in the $60 to $80 billion dollar range. Even when combining the US bond and equity markets, total daily volumes still do not come close to the values traded on the currency market.
The retail forex market, though small in comparison to the levels of trading undertaken by large financial institutions in the interbank market, is estimated at 10% of spot turnover, equating to around USD $150 billion daily.
In terms of the profile of people who trade FX, it is now actually a very inclusive activity. While historically Forex trading was largely practiced primarily by institutional players like banks and corporations, the introduction of retail FX trading platforms has provided individual investors with access to this financial market on a global basis.
Research shows that some people trade FX because they find the fast-moving financial markets interesting and compelling, some intend to augment their incomes through trading part-time and many trade the markets as a full-time occupation from home. There is no general profile as traders, men and women alike, come from all age groups and capabilities.
myi: What trends are you seeing in the foreign exchange industry?
Firstly, the industry has experienced significant popularity and growth since the start of the recent global financial crisis as investors seek alternative investment opportunities in the face of market volatility and a downturn in equity markets and view the currency markets as an attractive alternative proposition.
The growth in interest has generated increased competition and new market entrants, MahiFX included, offering investors a wide array of platforms on which to trade, and conditions under which to trade. This has resulted in the industry becoming subject to higher levels of scrutiny from regulatory bodies with particular respect to record-keeping, disclosure and the levels of leverage afforded to a company’s traders.
As proponents of trading responsibly, we very much welcome this industry trend.
myi: There are numerous FX trading platform providers, many of which are white-label platforms. How does MahiFX differ from those?
From the outset our core mission was to develop entirely new technology that would deliver genuine tight institutional level pricing direct to the retail trader. Pricing that to date has largely been unavailable to retail Forex traders.
Our years of experience in the interbank sector, prior to starting up MahiFX, meant that we had in-depth insight into the features and functionality prized by expert traders. That insight guided how the team engineered the sophisticated software systems and processes of the MahiFX platform.
In addition to the technological superiority of the platform itself, MahiFX differs from most FX broker models in that we operate as a Market Maker, meaning we aggregate and manage the risk on our books. So by removing the brokerage layer and its associated costs, MahiFX is able to offer its retail forex clients unrivalled direct access to highly competitive market maker rates.
myi: There appears to be some confusion between currency spread-betting and FX trading. What differentiates them?
The only difference is the tax treatment of trading profits and losses. The actual underlying trading is exactly the same.
myi: The FX industry is facing increased legislation. In your view, what are the reasons for this? How will this regulation shape the growth of the market? Will this trend benefit the average currency trader?
Part of it is the inevitable reaction against the excesses that lead to the Global Financial Crisis. Another is the public policy interest in protecting the increased numbers of individuals trading FX through the growth of the retail sector. Regulation should lead to a slow down in the number of new entrants, and may over time lead to consolidation in the number of providers. But the primary concern is that customers’ interests are protected.
myi: MahiFX currently offers access to the retail FX (Over the counter spot FX trading) market. Do your future plans include offering other instruments such as indices or commodities?
Perhaps in the future we will widen our offering of investment instruments but for the foreseeable future our aim is to develop continuous enhancements to our platform both in response to and in anticipation of client requests.
myi: What is MahiFX’s biggest achievement in your eyes?
I believe our biggest achievement to date is bringing together everything we learned in the institutional space, consolidating a great team of developers and translating that knowledge and experience into the creation of entirely new foreign exchange trading platform technology built from the ground up.
myi: What do you believe the future holds for the foreign exchange industry?
The story of FX over the time I have been involved has been tighter spreads, and increasing volumes, facilitated by greater and better use of technology, particularly in recent years to democratise access to the best pricing. I think these themes have a way to play out yet.
myi: What advice would you give to beg
