FNG Exclusive Interview… FNG talks to Tom Higgins, Founder & CEO, Gold-i and Crypto Switch, about industry predictions and Gold-i’s growth.

FNG: Hi Tom. What is your opinion on how the retail FX industry has fared in Q1 2023?

Tom: With so many uncertainties in the world and no end in sight for the war in Ukraine, volatility came back with a vengeance last year and continued throughout Q1. This has enabled many brokers who were previously seeing restricted growth to flourish, and has even allowed a slew of new brokers to enter the industry.

Gold-i’s biggest growth area in Q1 was our MAMs for MT4 and MT5, which are the most popular products in our portfolio. In fact, we’ve seen a 75% increase in leads for Gold-i MAMs over the last 3 or 4 months. This has largely been driven by the volatility, which resulted in increased trading activity and more traders wanting to get involved with the financial markets. Many traders, recognising the fact that they aren’t trading experts, turn to Money Managers – and the increase in traders has led to more Money Managers approaching brokers to access their services via a MAM (or PAMM) in order to trade on a master account and allocate trades to 10s or 1000s of sub-accounts.

Not everyone in the industry, however, saw growth in Q1. The tough economic climate in many regions has had a negative impact on some firms. The cost of living crisis, which is being felt particularly hard in the UK, has unfortunately caused some brokerages running on tight margins to close operations.

FNG: How has Gold-i adapted to the tough economic climate?

Tom: We are all too aware that price pressures have impacted the market and will continue to do so, which is why we continually review our sales strategy. One key change we have made in response to market conditions is that we have introduced a lower entry level for our core Matrix liquidity management product. We’ve scaled the product down whilst keeping the full functionality to allow significant cost savings for small and medium-sized players as well as a growth path for when they scale to new levels.

FNG: What are your predictions for the rest of 2023?

Tom: I believe we’ll still see decent volatility in the next six months, allowing brokers to make money, but there will be a levelling off. We will also see more consolidation in the industry.

The combination of MT5 being back in the App Store and the general acceptance that MetaTrader White Labels are not coming back, is resulting in more smaller brokers taking out their own MT5 licenses. This actually ties in well with our scaled down Matrix product. Brokers can have entry level licenses combined with our advanced liquidity management product for not much more than a White Label would previously have cost – so in terms of predictions, I definitely see increased uptake of MT5 happening.

As for the crypto world, MiCA being ratified was great news. The next step is for the UK to bring in digital assets regulation and then the institutional crypto market will really take shape. The UK Government has always been very bullish about the UK being a leading jurisdiction for digital assets and I believe we will see this happen.

The FCA is proposing extending existing licenses by adding digital assets as an extra asset class, whereas for MiCA you need to apply for a separate, new license. This is likely to make it far easier for firms offering digital assets to be regulated in the UK than in Europe – as existing FCA regulated firms have already shown that good governance and robust processes are in place. We’ll find out more about the UK’s position in Q3.

FNG: What are the latest developments with Gold-i’s digital asset technology, Crypto Switch?

Tom: We’re re-branding our Crypto Switch™ as a hybrid ECN in response to market feedback. This fresh approach to marketing, along with steadily growing demand for digital assets from the institutional market, will enable us to accelerate growth.

We continually evolve our Crypto Switch™, which is a robust institutional solution for consuming or distributing crypto liquidity, and we now have a large set of Market Makers.

The collapse of FTX and dominance of Binance, have actually created more opportunities for us. Financial institutions are cautious of partnering solely with a single massive company because this creates enormous risk. Instead, they prefer to spread their risk by partnering with different, trusted parties for different aspects of the trading process – such as custody, clearing, credit intermediation or execution (which is the part that Crypto Switch™ can play). This is exactly how institutional markets in FX have developed – and makes perfect sense in the digital assets space.

FNG: What are your plans for geographical growth?

Tom: Middle East is probably the most interesting area for FX at the moment and is where we are seeing the most aggressive growth. The very vibrant climate that Dubai and Abu Dhabi offer to the international market and the availability of talent make it an attractive region for new business development.  It’s also digital asset friendly – so it is certainly a region to consider as part of our future growth strategy.