IBTimesFX had the chance to hold an exclusive interview with Drew Niv, CEO of FXCM.

What is your professional background?

I started in Bond Trading in the early 1990s. Then I moved to one of the first currency trading companies in the US, a retail currency trading firm. And then I started FXCM in 1998. I founded FXCM with 5 others.

Who is your target audience? 90% of our customers are individual currency speculators. 10% of our revenues come from institutions like hedge funds and banks.

What makes you interested in UK? 

FXCM is the dominant horse in online FX Trading in North America. We have approximately 30% market share. We also have business in Asia, this is even slightly bigger than our North America business. Europe is the place where we have traditionally not a big presence. The ODL acquisition gives us obviously a big footprint in Europe and the UK, one of the most important markets. We need to get into it.

FXCM is now in Europe present in London. But do you plan to go also to other European countries like for example to Germany?

Well, we already have an office in Paris; we have an office in Berlin; we have an office in Milan, Italy. We have also an office in Greece. With the ODL acquisition we got a lot of clients in continental Europe, in eastern Europe and also the Med countries. We have a big office for example in Turkey. The ODL Acquisition gives us obviously a huge presence in Europe.

Are you targeting commodities traders, Forex traders - CFD or Spread Betters? Our specialty is the Forex Market. We also do the Index and Commodities CFD business as well. We are new in this but we have a pretty impressive offering that is integrated with our FX offering. But with the ODL Security we are expanding into the shares and Futures business in Europe as well. The ODL allows us to cross sell all these additional products worldwide in Asia, Europe and North America as well.

A lot of our clients come from Malaysia where they say Forex is very popular, and a good place to start, what do you think?

Well, traditionally FXCM has been very strong in Asian countries. Actually our Asian business is bigger than our North American business; over 45% of our clients come from Asia. We have a hugh presence in Asia; we have about 100 people in our office in Hong Kong, that is our original Asian Headquarter. All the services we have in English for example platforms and researches we offer also in Chinese. We have 24 hour client support in Chinese. And our research in Chinese is one of the biggest. The url is http://www2.dailyfx.com.hk/index.php Even people who don't trade Forex use our research.

Tell me more about your no dealing desk model for forex trades and FXCM's philosophy on no re-quotes. Let me explain to you. In 2006 or even earlier the only way to connect retail clients with the Banking Market was what was used to be called the Retail Dealers or the Retail Aggregators. So, Retail Dealers are market makers to their customers; and they traded on a home sale basis with their banks. Obviously this lead to a lot of problems. The Retail Dealer chooses not to hedge the client's positions but to take the other side of the trade 100% of the times or a significant percent of the times. So they have a conflict of interest with their clients.

In 2006 FXCM invested millions of Dollars and many years of technology to turn the business into an agency model called no dealing desk, where we have today 15 price providers, 12 banks and 3 hedge funds. They are market makers on the system. FXCM is not the market maker at the system. FXCM aggregates all these and takes the best offering for each currency pair from each market make. The market makers cannot see the client's positions. They can only see that they are trading with FXCM. FXCM has over 200,000 clients trading. 

How is the forex market different from two or three years ago? The Forex Market today is very different. It's started to mature. Customers are getting much more sophisticated. They want more automated trading solutions. They are having less of a gambling mentality. They are much more careful traders. They are getting smarter.

A lot of people are coming to FXCM because they are starting to make money and don't want to have a broker who is working against them. Because we are an agency broker we get paid by volume. So we want as many profitable customers as possible, because they do more trading.

What do you think the EU must do to come out of the debt crisis and to avoid crises like this in the future? First of all I want to say that I am not the most qualified person to answer this question. But my personal opinion is that it is not just a European problem but just the spot light is on Europe right now. A lot of countries are running a lot of deficits and large debt loads. In the last 20 years many countries like US and Europe have not saved enough but have spent too much. The civilization has to stop spending too much and make less debt. And this is actually the only way. We have too much debt and the only way to avoid debts is to cut budgets. This is not a pretty answer that people want to hear.

FXCM has been very profitable for many years. But we always say that we have a big balance sheet; we put a lot of our profit onto the balance sheet to have big cash tuition for bad times. Luckily they have not come yet but they may. So, we have no debt in FXCM. I personally don't believe in debts. FXCM has no leverage but a lot of capital. So, it is able to absorb other companies who are in need for this. 

Would you advise to UK residents trade CFD's or Spread Betting?

Essentially Spread Betting is very similar to normal trading except for UK residents there is a tax if you own it. So, obviously it would be better for people to trade Spread Betting. Unfortunately the majority of the Spread Betting firms see the client not as a trader but as a gambler. And if you see how casinos use a gambler with great customer services like free drinks. But the casino also needs you to lose. And they treat you very nice if you do. But they will not treat you very nice when you start making money. So FXCM encourage people to make money and not to lose. Because we make more money when our customers make money.

Tell me more about the new free education course you offer all live clients. We've had since many years trading education courses. These courses we recently put into a video format. We have 60 videos about different topics from risk management to technical indicators and a lot more free resources for clients. We have those in English, Spanish and Chinese. So all our clients have the benefit to go and watch these videos and also to ask questions to live instructors who are very experienced traders. On this system the client can ask questions to the instructors. But the client can also see the questions that other clients asked. We have also programmers to help clients who have ideas about automated trading.

This is a part of our educational effort to make clients not lose money. Our researches we have basically in English and in Chinese but also in some European languages.


What are your plans regarding your recent acquisition of ODL?

Well we are spending the next 6 weeks integrating the systems and pulling over the ODL clients into the FXCM Trading Platforms. Then we will be integrating the two companies together. And we will be adding many of the products from ODL to the global menu of the FXCM products. Clients worldwide will be seeing an increasing of offered products. ODL has many more products than FXCM and this is also a reason why we acquired ODL. This is definitely something where we are very excited about it. As well we are bringing better products to the European markets. So I think European clients will certainly have a huge benefit out if it.