China Targets Forex Transactions

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Queen’s Awards: World First targets forex market gap

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Jonathan Quin and Nick Robinson founded World First, a currency exchange company, in 2004 with the aim of providing a cheaper and better service to small businesses and private clients than the big banks were offering.

Twelve years on from its start in a south London basement, World First is one of Europe’s fastest-growing financial technology companies. It has offices in London, Singapore, Hong Kong, Sydney, Washington DC and Austin, Texas, with plans to open more in the Netherlands and New Zealand.

The company, which wins a Queen’s Award for International Trade, now employs 430 people and expects to add 80 staff this year. World First derives just over half its sales from customers outside the UK, up from 15 per cent three years ago.

Competition in the foreign exchange market is growing but Mr Quin, chief executive, says: “More people are living, working, travelling and investing internationally and more businesses are importing and exporting, so we still think there is a vast market — even with more competitors in it.”

Mr Quin and Mr Robinson, both foreign exchange bankers, started work at Citibank on the same day in 1996. They discovered that while large companies received expert service and favourable rates from banks via the interbank market, smaller companies and individuals did not.

“We kept meeting friends working at smaller businesses and we had friends whose parents were buying property abroad who were getting terrible rates and didn’t get any service,” he says.

The arrival of electronic price feeds in the early 1990s in the foreign exchange broking market provided an opportunity. “We wanted to democratise that process and provide the rates and service and products that the big guys got to the smaller guys,” Mr Quin says.

He estimates that, where a bank might charge a 2 or 3 per cent margin on a transaction, World First will typically take 0.9 per cent. Customers can make transactions online, via a smartphone app or by telephone. “Our app is designed so you can get in and out within a minute if you are paying to somebody you have paid to before.”

Mr Quin says World First competes on price, service and hedging products. Its three business areas are small companies, ecommerce merchants and private clients.

“We are very excited by opportunities in the business-to-business market, including corporate and ecommerce business. We are probably moving towards being a provider for businesses, whereas a lot of our competitors are more in the retail consumer space.”

The margin made by many banks on clients’ currency transactions

The company is seeking to expand its partnerships, in which it provides a “white-label” foreign exchange service on behalf of other companies who offer the service to consumers under their own brands. Virgin Money is a current partner.

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World First sold a 40 per cent stake in its business to FTV Capital, the US private equity group, in 2020. The rest is owned by Mr Quin, Mr Robinson and chairman Sir David Clementi, former deputy governor of the Bank of England. Sales were £55m in the 11 months to December, up from a full-year £26m two years earlier, and operating profit was £15m.

World First is halfway through a plan to increase its revenue by five times in five years. While growing competition in the sector squeezes margins, it also raises awareness of alternatives to the banks. Mr Quin says: “We have got lots of good and ambitious people here and it’s an exciting challenge to keep growing the business internationally.”

The typical margin taken by First World on a transaction

The founders had the idea for their venture while working at Citibank, but decided to stay in the City until they had saved enough cash to survive for two years — Mr Robinson went to Crédit Agricole and Mr Quin worked at Royal Bank of Scotland.

Mr Quin believes one of World First’s advantages is that, whereas banks provide an expert service to large companies, smaller businesses are put in the hands of a general relationship manager who may have 3,000 other clients and lacks specialist knowledge of the foreign exchange market.

About a fifth of World First’s business comes from private clients who need to exchange money for things like buying property or paying tuition fees. Its company business is mostly small and medium-sized enterprises exchanging between £100,000 and £20m in currency a year, generally to pay suppliers.

Global ecommerce merchants are a growing area of business. Many are new or fast-expanding concerns. On behalf of a trader selling digital memory cards, for example, World First might collect US dollars from global sales, convert them into a home currency and move these into the client’s account.

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Forex transaction types

Are you thinking of investing in the fx market? Do you know its various types? Well, as a beginner, you may not be aware of the different types of transactions involved in the market, but to come out as a successful trader, it is our duty to let you inform about types of transaction in forex market.

Every one of us practicing trading business knows it well that fx means switching of one currency to another for an exchange rate. But only a few people know that a number of complicated transaction processes involved in the trading market other than just swap.

When you have made up your mind to invest in the fx business, learning about forex transaction types can be of huge advantage. This will allow you to get a wealth of trading options that can increase your chances of making a profit and minimizes the risks of loss. So let’s start with the types of first –

Forex transaction types – a brief report

  • Basic exchange of currency

If you have ever visited a foreign country for travel or business purposes, you must have used cash to buy euros, dollar, yen or any other local currency. The price you paid for buying a currency is called the currency exchange rate.

However, the price or the exchange rate will not remain static. It changes from time to time, especially in respect of the demand of one currency in exchange of another. The demand for currency also gets affected by different factors such recession, the economy of the country, inflation and so on.

  • Forward contracts

Most of the business organizations and financial institutions aim at protecting themselves from the financial loss which may occur due to currency exchange. The forward contract is an effective way of doing this where forward contracts are treated as future contracts that ensure traded security. In this type of contract, one party agrees to sell future currency to the other party at the pre-determined exchange rate.

Futures contracts are quite similar to forward contracts except few differences. While a forward contract is specifically designed for the clients based on their current trading situations, a future contract only includes maturity dates and contract size. These future contracts are exchanged only in terms of standard exchange. In a forward contract, the margin is not required whereas; in future contracts margin is required for all traders operating in the future market of trading.

To define swap transaction in forex market , let’s cite an example here – Suppose you have recently shifted your business to Europe and you need euros for continuing your business operations. But you have only dollars that you don’t want to convert in Euros for the fear of facing the loss of money if the market goes in a reverse direction.

Under such a situation, what comes as the best solution? Simple, a currency swap offers the ultimate solution to deal such a situation where you can borrow euros from a currency dealer and lend your dollars. You can continue this process for a specific period. After that, you have to return the Euros and get back your dollars at the pre-set exchange rate.

Fx option is quite like other contracts where traders pay premium amounts for buying or selling trades at a staggering price rate. If the rate of exchange moves in favor the trader before this fx option expires, he or she can earn maximum profit. Similarly, if the exchange rate does not go in favor of the trader and this fx option expires, the trader may incur a loss.

Hope you all get a brief idea about various forex transaction types, and now you can start trading in the market that yields maximum profit in less possible time.

The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.

Advantages and disadvantages of the Forex transaction copying service

What is copying deals: how to use the service, how copying deals differs from forex investing, how to profit from copying deals.

Today, there are many alternative methods of trading on the Forex currency market. One of these methods is copying trades of successful traders using special software. Services for copying transactions in the foreign exchange market are quite popular and more transparent than trading using forex advisors. Let’s try to evaluate the pros and cons of the transaction copy service.

Benefits of Copying Forex Trades

Each trader has his own requirements. In accordance with them, the Forex transaction copy service provides him with the opportunity to choose a trading strategy that will satisfy him as much as possible.

Trading results for the strategy chosen by the trader can be seen before joining the transaction copy service. Compared to the Forex robots service, the transaction copy service makes it possible to see a daily update of your performance indicators.

Based on the data provided, the trader can obtain information about trading instruments, the number of profitable and unprofitable transactions, the duration of transactions, the maximum value drawdowns And so on. After analyzing the parameters of interest to him, the trader can reasonably make a choice of a trading strategy.

The service of copying deals, which is very important, eliminates the emotional component, saving the trader from worries about the correct or erroneous entry into the market. Trading using the transaction copying service does not depend on whether the terminal of the client who has joined the service is turned on.

A very important feature of the transaction copy service is the possibility of parallel trading and managing already opened transactions. Nothing prevents you from closing a deal manually if you are afraid of losing your profit, or opening a new deal if there is a clear signal to enter the market. Along with this, it is worthwhile to understand that by making your own adjustments, you can violate the trading tactics that the managing trader adheres to, which, perhaps, will be critical for the client.

Disadvantages of the copy transaction service

The market situation is constantly changing, therefore, simply joining the service of copying transactions and simply regularly taking profits will not work. It is necessary to constantly monitor the dynamics of what is happening in the market. In this sense, copying deals is not a complete investment. Control over your account is carried out only by the client, “manager” trader he doesn’t care. Therefore, it is necessary to constantly monitor the market situation and the state of your account.

The trading results are quite relative, as they are true for a certain account (the account of the managing trader). Therefore, it is very important to correctly determine the parameters for copying transactions depending on the ratio of deposits, leverage, etc.

The very expression “managing trader” is used by us for convenience and is essentially incorrect, since the trader trades exclusively on his account and his own money, and the client, using the service, automatically copies his transactions to his account. The “managing” trader often does not even know how many client accounts copy his transactions.

From here two conclusions follow at once. The first is that the “managing” trader does not bear any responsibility in case of loss of any funds by the client, unlike the managing director PAMM Account. The second – a few losing trades on the deposit of the “managing” trader can be a small drawdown, while a smaller client deposit will simply cease to exist.

In conclusion, for the sake of completeness, it is worth highlighting the clear difference between the PAMM-account service and the Forex transaction copy service. If PAMM is an investment in the Forex currency market, when a client entrusts his funds to a PAMM-account manager, with all the ensuing consequences, the transaction copy service is the opening of transactions similar to those opened by the trader selected by the client on his deposit and is not an investment , which does not prevent him from having high popularity among alternative methods of trading in the Forex currency market.

FORTRADER magazine experts

FORTRADER Magazine is a large team of experts in trading in financial markets. Traders, managers, investors, programmers, testers, technical administrators – we all work for you every day for many years. Sometimes we write articles together, then the whole journal becomes the author.

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