TopFX Ltd. is a well-established multi-regulated brokerage firm catering to institutional and retail clients, headquartered in Cyprus. It operates two brands: institutional prime brokerage TopFX and retail broker Fondex.
This year, the FX and CFD broker celebrates the 10th anniversary of Alex Katsaros’ leadership. A “power user” himself and former Head of Product Development of world-renowned trading platform cTrader, the veteran executive is well positioned to deliver a robust client-focused service for traders.
FinanceFeeds grabbed the opportunity to speak with Alex Katsaros, Group CEO at TopFX, in an interview that covers the evolution of the FX industry and TopFX in the last ten years, the difference between catering to brokers and retail traders, how to launch an FX broker today, the iFX Expo Bangkok, and cTrader vs MetaTrader.
You’ve been leading TopFX for 10 years now. How has the FX industry changed and how did TopFX adapt to stay in the lead?
Yes, I am very fortunate to be an executive director for the last 10 years, and the CEO for 6.5 years. It has been an amazing journey for both myself and TopFX, but a pretty rough journey for the FX industry.
Our industry went through both positive and negative changes. The largest difficulties we face now compared to 10 years ago are regulation and payments which create significant entry barriers to new players. For example, 10 years ago an investor could open a company in Vanuatu, SVG or any other tax haven, set up a platform, open a bank account, receive deposits and start offering services. Banks didn’t distinguish between clients’ funds and operational accounts back then. Today this is almost impossible. Most banks or EMIs won’t accept doing business with an unregulated entity. Sometimes, even regulated entities have a hard time finding banking partners, hence FX companies turn to crypto to quickstart their business.
On the positive side, the broader usage of mobile phones and the growth momentum of cryptocurrencies brought many new clients to the industry. As a result, the volumes that we are seeing now from the biggest CFD brokers are 10 times larger than before.
Lastly, the stricter regulations and growing competition in terms of quality of service have improved the industry. In the past, it wasn’t uncommon for brokerages to have unfair conditions for clients. Today, traders are well-informed and can easily explore a broker’s reputation through online research. Due to the overall upgrade of the conditions offered to clients, anyone who chooses a regulated broker with a positive reputation can rest assured that will be treated fairly.
TopFX caters to both brokers and retail investors. Which segment weighs the most and which one is easiest to work with?
That’s a tough question. I would say that both segments are equally challenging.
On the institutional front, we offer liquidity and technology solutions to other brokers and this requires great know-how, a very competitive product, and customizable support depending on the client’s level of familiarity with the industry. Often, you have to teach clients how platforms and aggregators work but sometimes more basic training is required; for example, you may have to educate clients on margin and leverage, if they are new in the business. Luckily, we have been in the liquidity business for 12 years so we have literally seen everything, and we have the experience to solve any problem, adapt to any situation and have realistic expectations about the future.
The retail segment is a different game altogether. What’s most challenging about retail is the scaling that a broker needs to achieve in order to grow. To be competitive in the retail front, we need to be active in multiple countries, understand many cultures, do localised marketing with different rules, be compliant with different regulations, provide support in our clients’ language and many other things. A retail FX brokerage is a large-scale operation, and unless you are targeting only one country, you are looking at a minimum of 50 employees to get started.
The second challenge in retail is to have a competitive product that makes sense financially. Expenses for brokers have multiplied due to regulation, higher salaries compared to the past, and at the same time revenues have shrunk because the product is literally 10 times cheaper than before with spreads of 0.0-0.1 on EURUSD and the whole world going swap-free. At the same time, it’s a well-known fact that most brokers rely on partnership programs which have to be appealing and rewarding enough to keep partners motivated.
What is the best approach to launching an FX broker in today’s industry?
That’s a topic I could speak about for hours, but I will try to keep it short by focusing on a brief step-by-step guide.
The first step is the client acquisition plan. If that’s not in place there is no point to start, and your brokerage needs a competitive advantage that will ensure success in such a competitive environment. How will you acquire clients? Are you a marketing genius and do you have the knowledge to use resources and budget in the most effective way? Do you have many connections and partners in similar industries like asset management, trading or investment? Do you have ties with influencers or are you an influencer in the financial space in your country? Are you an expert in setting up boiler rooms (if it’s allowed by regulations in your country)? Whatever it is, the acquisition plan needs to be drafted before you start.
Secondly, you need to find a way to differentiate. If you don’t have a narrative that clearly distinguishes your brokerage from competitors, the operation will fail. TopFX’s brand story is that we evolved from a Liquidity provider to a retail business, we provide our own liquidity stream, and our experience as an LP allows us to offer a quality of service to our retail clients, suited for big players and large institutions. We are the go-to broker for large traders because there are no retail traders larger than brokerages.
Thirdly, potential investors need to have the required tech know-how, especially about trading platforms, CRMs and websites. They need to be able to do great onboarding funnels that make it easy for clients and partners to onboard. Our industry is purely online, and it’s all tech.
Lastly, investors need to know their way around laws, regulations, company structures, and formations because in our industry the legal part is quite complex. An FX brokerage is always a group of companies in different jurisdictions, each one requiring its own attention, and being run by its own rules.
The iFX Asia Expo is coming up in just 2 days. What do you expect and what plans do you have for the region?
I am definitely expecting a great expo. Ultimate Fintech is a very experienced company, and I am glad to see them polishing further every year, the iFX Expo never disappoints.
Since this time it’s taking place in Thailand my goal is to educate brokers mostly about cTrader and our All-in-One solution. Thailand has consistently been a great country for our institutional business, but we know that cTrader’s penetration in Southeast Asia can be improved.
I am presenting a workshop entitled “How to keep traders engaged” where I outline the most important steps a brokerage must take to keep their traders engaged, as well as how to leverage the cTrader platform’s features for that purpose.
When it comes to our clients I have a list of VIP clients I want to touch base with, meet our Thai team, and meet our close partners in the region.
cTrader or MetaTrader 4?
I am not the most objective person to answer this question as I was the head of client-side product development of cTrader, which makes me one of the key persons in the team that built cTrader for windows, cTrader web, cTrader mobile, and cTrader Copy.
cTrader was built with the purpose of improving every single aspect of MetaTrader 4. Every feature we developed had to be better, easier to use, faster, prettier and more sophisticated, and it’s not that I didn’t like MetaTrader, I was in fact an expert and liked the platform which made my job a lot harder!
However, due to the fact that MetaTrader 4 was pretty outdated when we started developing cTrader, I am quite sure that we managed to create a vastly superior product. All aspects of cTrader, from the most technical parts to platform looks make the platform so much better. I can briefly name trading server features like order execution, types of symbols allowed, depth of market, FIX protocol support, order types, server-side chart data, lack of bridge required to connect to the LP, the amazing user interface, great mobile and web applications, built-in copy trading, integrations, blotter, symbol centric menus, QuickTrade, chart trading, detachable windows and I could go and on.
cTrader is gaining a lot of ground. We knew that it would not be a fast transition. We knew how many years it took Chrome to overtake internet explorer. We get that user habits are extremely difficult to change, and it’s not like MetaTrader 4 doesn’t work. It works, and for some traders, it works great. We are happy to be offering it and we understand it’s a key product in a retail CFD broker’s offering. We do however see the dynamics between those platforms, and the dynamics show that cTrader adoption grows a lot faster than MT4’s.
What does TopFX have in store for the foreseeable future?
We are pretty much happy product-wise. We offer great trading conditions, account types, both cTrader and Metatrader 4, copy service, asset management, and every single payment method a retail client would require.
We will continue attending all events globally. I want to be present so as to spread the word about our products and services. In addition, I want to do business with every big partner, or large trader personally, it’s important to make them feel secure and catered to. The expos are a great way to meet as many of them as possible.
One important area of focus at the moment, which will be released quite soon, is some new features in our CRM. We built features to upgrade our IB panel and for our introducers to see various analytics and data for their clients and business in TopFX. On top of that, we are launching a new loyalty program where our introducers get additional rewards the longer they stick with us.
TopFX is a company that grows about 5% monthly. We have doubled our volumes and funds in 2022 compared to 2021, and that also creates a lot of growth and scaling-related challenges. We are hiring country managers to offer better support globally as well as enhancing our operations with new people in most departments to facilitate our growth.