FVP Holdings
What Impact Will Brexit Have on CFD Brokers?
25 Sep 2020


We’ve passed the half-way mark for 2020, has been an eventful and often unpredictable year for the foreign exchange (forex or FX) industry so far. Brexit, Coronavirus, and regulatory changes have all made their mark, and the remainder of the year is set to be just as volatile.

One company that has thrived during this ever-changing landscape is FVP Trade, a provider of online FX, CFD, and Crypto (currency) trading. The company has emerged one of the most prominent trading platforms in the industry.

At the beginning of this year, <Finance Magnates> sat down with Tim Booth, CEO of FVP Holdings, but with so many changes already having taken place in 2020, we’ve caught back up with Booth to hear more from the company.

The Brexit transition period provides some clarity

Specifically, when we last spoke with FVP Holdings, they revealed their plans to make FVP Trade widely available in the United Kingdom. In light of this, we asked what the company expects for the industry in the UK over the remainder of the Brexit transition period.

“FCA brokers are still waiting for further clarification once the Brexit deal is finalised. It is difficult to know exactly how brokers will be able to commercially operate after this period but either way, I expect them to be ready to segregate UK operations if and when needed,” Booth told <Finance Magnates>.

When asked about how the retail trading industry will be affected post-Brexit, from January 2021 onwards, he continued:

“From the regulations point of view, it probably won’t (have much impact), given that the UK is still a member of the G20, an equivalent to the EU, therefore the legislation overlooking the financial market will remain the same.”

“Our UK operations will continue under current FCA regulation. We are monitoring Brexit negotiations closely, so depending on the outcome of any trade deal made, we have considered the option of further accreditation under CySEC, to enable our European operations to proceed.”

The rise of start-up brokers

Speaking on the small or start-up broker, when we last spoke with FVP Holdings, Booth explained that more start-up brokers had been entering into the FX market exclusively using FVP Trade’s MT4 accounts in 2020, so we asked if he expects this to continue into 2021.

“Yes, we certainly do see this continuing. In fact, we are pleased to have welcomed a few new brokers to the FVP Trade family in August. While a large established broker has joined us, it is safe to say the start-up trend remains strong,” Booth explained.

With more and more start-up brokers trading with FVP Trade, how has this influenced their service? According to Booth, it hasn’t had much of an impact, as the company was ahead of the curve, and planned for such an inevitability.

“The truth is we were more ahead of the curve. Early on, we started with a scalable commercial solution both in terms of costs and management capabilities without the burden of massive upfront costs irrelative of if the broker succeeds to scale or not.”

Brokerage business becoming more competitive

Nonetheless, with the brokerage business becoming more competitive, FVP Trade has been continuously developing and expanding its product offering to stand out from the crowd. Previously, the company partnered with GFX Tech to provide PAMM systems to help traders profit without trading experience. Going forward, there will be more initiatives and new product launches to help traders succeed in the unforgiving financial markets.

“We like to have a strong line of communication both with our brokers and traders using FVP Trade’s accounts so that we can get a good amount of feedback. For traders, it is the newly launched FVP Trade Official twitter account and the longstanding market analysis portal which will provide effective two-way communication between traders and the company. Every so often we take a look at what is requested and then consider the development and potential benefits in functionality.”

“It’s safe to say that things like an intuitive economic event calendar and signals or analysis tools are already a standard. If you’re not offering them, there is another broker who is and traders are expecting those tools included in their account.”


Commission-free trading race

Across the world, more and more brokers are jumping on the commission-free trading race, with the competition particularly heating up in the United Kingdom. In 2019 FVP Trade removed commissions from its copy trading services.

Commenting on the trend, Booth said: “Touching on zero-fees, 2019 was an interesting year. Especially in the UK, we saw some large brokers either lowered their commissions or dropped them completely. I think we’re only going to keep seeing lower fees for the retail trader. If we zoom-out, this has been happening for a while now. Not long ago, brokers could get away with charging £10-15 just to enter a trade. Can we ever go back to those kinds of charges…? I think not.”

Looking to the future

Although it feels like a lot has already happened in 2020, we still have several months until the end of the year. One trend which is expected to only further dominate the CFD industry is the importance of mobile trading. Because of this, we asked FVP Trade what it has in store for its mobile offering.

“Building off the idea of more seamless trading experience from using MT4 for Web and PC in 2019, we improved by offering more products, which include Stock indices and Cryptos this year.

“You’re working with a limited amount of space; how do you add value to a trader’s actions and information in the app without distracting him from his risk management and trading decisions?  This is a challenge we’re excited to undertake. ”

Market conditions

When asked about the potential impact of a no-deal Brexit on market conditions, Booth shared:

“In terms of currency pairs and tradable assets, the most affected currencies are likely to be the GBP, EUR, and even possibly the USD. Brexit likely provided uncertainty with regards to the future relationship between Britain and the rest of the globe, as well as for the GBP and Euro.”

“The pricing for currencies is massively based on supply and demand, which is why the uncertainty might steer investors away from buying the currency, consequently affecting the demand. This could potentially depreciate the value of the GBP and EUR. Traders might even steer their capital towards the USD and other more stable assets like the JPY and CHF.”

Global expansion

When discussing the potential of a decline in trading volume post-Brexit, Booth revealed FVP’s ongoing plans to expand its Asian markets.

“We currently have offices operating in several Asian countries, so this is definitely a market we will continue to focus on. The Chinese and Japanese markets in particular offer huge potential. Any future new trade deals between the UK and Asian countries can only have a positive impact on retail trading”.