Top FX industry news stories of 2021
While the COVID-19 pandemic continued to march on from 2020 affecting every part of the business and financial world, the Retail FX industry had another fantastic year in 2021 as conditions remained conducive to business.
Financial volatility remained, although somewhat muted as compared to 2020.
More and more retail (and institutional) traders became interested in trading crypto, as well as holding it as a store of value.
Equity markets continued to climb to all-time-highs, accompanied by volatile down-and-back-up swings and led by names very familiar to retail traders (Alphabet/Google, Amazon, Tesla, Netflix…).
People everywhere continued to do more things online.
Interest rates (i.e. what you can get for “safe” investments) remained near zero.
That all added up to record trading volumes, revenues and profits for the Retail FX sector. But, it was somewhat of a haves and have-nots market out there, with some FX and CFD brokers setting activity records month after month, while others were clearly struggling and losing business to more aggressive and better prepared competitors.
Our Top FX industry news stories of 2021 are a combination of one-off stories, as well as themes which emerged during the year through various articles and discussions here on FNG.
Which stories and themes made the cut?
What was the most-read story about a Retail FX broker on FNG in 2021?
Which FX brokers broke records in 2021, and which ones declined?
What was the M&A deal-of-the-year in the Retail FX sector?
Which FX industry CEOs “changed teams” in 2021?
Before we begin, we here at FNG would like to take this opportunity to wish all our readers happy holidays, and a safe and prosperous 2022. We appreciate you all making us the most-read forex industry news site in 2021 as we broke virtually every news story in the sector that mattered – and we will continue to take that responsibility very seriously into 2022. Hope to meet you all in person as well as online in the new year!
FNG’s Top FX industry news stories of 2021
1. eToro’s IPO (or rather, SPAC merger) at a $10B valuation…. or not
To lead off our list, we’ll say that the most-read article on FNG in 2021 about a Retail FX broker was actually a small series of articles about eToro’s plans to go public. Starting in mid March 2021, with our exclusive coverage revealing eToro’s plans to go public via a merger with an already-public special purpose acquisition company (or SPAC) in a deal that would value eToro at about $10 billion, through to another FNG exclusive that the eToro deal was being postponed to Q4 and then again into 2022, all eyes in the Retail FX world have clearly been on eToro.
And the reason is easy to comprehend. Should eToro succeed, a number of other brokers would certainly like to look at a public markets exit as well.
In our most recent article from mid December, we point out that the eToro IPO plan being delayed into 2022 is presenting some issues, which may impact whether or not eToro can go public as planned – or anywhere near its hoped-for $10 billion valuation.
2. Robinhood soars to an IPO, but then falls flat
Online broker Robinhood has changed the online trading industry not just in the US where it operates, but around the world. Robinhood forced the entire retail brokerage industry in the US to move to a zero-commission structure, although some brokers have been fighting back. And, it changed the way many Retail FX and CFD brokers went about their business as well, setting new standards and speeding up changes such as a focus on mobile trading and offering the latest crypto craze to clients (Dogecoin, anyone?).
While Robinhood did succeed in going public (NASDAQ:HOOD) in July 2021 at a valuation of $32 billion, its shares have fallen flat and are down about 75% since peaking in early August in the weeks after its IPO. That doesn’t bode well for Robinhood shareholders, obviously, but also for any other online broker which has thoughts of going public (see eToro above).
3. M&A deal of the year – Finalto / Markets.com sold for $250M
When Playtech shareholders voted overwhelmingly on December 1 to approve the sale of the company’s financials division Finalto to Gopher Investments for $250 million in cash, it brought to a close one of the more drawn out and interesting M&A deals which we have witnessed in recent years in the FX sector. (We’d note however that the sale isn’t going to close until early 2022, once all regulatory approvals are received).
We had broken the news all the way back in August 2020 that Playtech had engaged investment bank UBS to look at selling FX-B2B services division Finalto (then called TradeTech) along with the group’s Retail FX operation Markets.com, and then again another FNG Exclusive report in January 2021 that the company was finalizing the sale of Finalto/Markets.com in the $200 million range, to a consortium led by Israeli businessman Zvika Barinboim. It wasn’t until the end of May the the deal was signed.
However a late bid for Finalto emerged, from Hong Kong based investment firm TT Bond Partners, through an investment vehicle named Gopher Investments, offering to pay more ($250 million) for Finalto. Although its bid wasn’t yet binding, Gopher convinced Playtech shareholders to reject the Barinboim group offer. A few weeks of negotiation and due diligence ensued, after which Playtech and Gopher agreed on the $250 million price tag for Finalto and Markets.com.
4. The trillion dollar volume club… and the other end of the spectrum
As retail traders went more multi-asset including crypto trading when volatility reigned, a number of Retail FX and CFD brokers seemed to sense the wave and set all-time volume records in 2021. Indeed, two brokers – Australia’s IC Markets, and Limassol based Exness – saw more than a trillion (!!) dollars of monthly client trading volume toward the end of 2021.
At the other end of the spectrum, one-time industry leader Saxo Bank has seen its trading volumes shrink, to the point where its core client FX trading volumes have dipped below the $100 billion mark in two of the past four months. As recently as 2018 Saxo was doing north of $300 billion (and sometimes $400 billion) in monthly FX volumes. Poland based XTB, the largest Retail FX outfit located in Eastern Europe, has seen its shares (WSE:XTB) drop by about 10% in 2021 as the company has had a very up and down year results-wise, including a 70% revenue drop in Q2.
There are many other examples and brokers out there of course, but the key takeaway from our coverage of the sector this year is that this hasn’t been a case of a rising tide lifting all boats. The tide is definitely on the rise, but clearly some brokers have figured out what retail traders are looking for (and how to find and get to those traders) a lot better than others.
5. Forex broker sports sponsorships
As FX brokers continued to do well from 2020 and into 2021 – and as record numbers of new and younger clients open accounts – brokers have decided to pour an increasing amount of their marketing budget into sports related marketing.
Brokers like IC Markets have engaged with groups of sports teams in Tier-1 leagues, not just individual clubs. More and more brokers signed front-of-shirt sponsorship deals with leading soccer clubs, not just “Official Trading Partner” type agreements.
One of most-read interviews of the year was indeed with someone outside the Retail FX Sector, Matt House from sports marketing agency SportQuake, which went into the details of how sports sponsorships work, how the brokers view ROI, and what the future of sports based marketing likely holds.
6. Move to offshore FX brokers continues
A somewhat more subtle trend detected in perusal of our most popular stories of 2021 is the continued growth of offshore brokers, which includes some of the “properly regulated” Australia, UK and EU based brokers opening up or expanding their own offshore licenses and subsidiaries.
The echoes of regulator actions in recent years to limit leverage that FX and CFD brokers can offer retail clients (among other restrictive moves like limiting deposit bonuses and certain marketing techniques) are still reverberating in the sector. It is clear that many clients want to be able to use more leverage like in the “old days”, and there certainly are brokers out there willing to offer it.
We have even seen some of the offshore brokers becoming involved with sports sponsorships and brand ambassadors, such as GemForex signing up David Beckham as brand ambassador.
7. Forex Industry management shuffle
The term “CEO” has been thrown around so much in the financial services sector (as in, “we’ve hired a MENA Region CEO”, or “our new institutional CEO”) it has usually become as commonplace and meaningless as are Forex industry awards.
However when we look back at the “real” CEOs who run entire brokers or separate regulated units of brokers, those titles do really mean something and come with some real-world responsibilities. Like virtually every other industry on earth, the FX sector is run by people – and whether or not a broker does well is usually determined by the quality and abilities of the people behind the scenes.
The year 2021 saw a fairly large number of senior management and CEO switches at a number of brokers and service providers across the globe, with virtually all the “big name” moves being reported here first at FNG. The list of companies making CEO and/or senior management changes in 2021 includes TeraFX, GKFX, GKPro, OANDA, Spreadex, Zenfinex, Capital Index, USGFX, ADSS, Equiti Capital, BUX, Admiral Markets, Exinity, ICC Intercertus (formerly EverFX, now Axiance), Advanced Markets, Trading 212, JFD, eToro, Broadway Technology, TIO Markets, and GMG Markets.
Some of the more notable FX industry management moves of 2021 include:
❑ Muhammad Rasoul coming out of a brief retirement after leaving Finalto (which had bought his Alpha Capital Markets a few years ago), to become CEO of UAE based Amana Capital.
❑ David Hodge leaving as CEO of OANDA UK to become Skilling’s CMO.
❑ Paul Webb departing as ADSS UK CEO, to join rival Equiti Capital as COO.
❑ Mukid Chowdhury leaving Tickmill to become Trading 212 CEO.