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News broke this morning that one of Australia’s leading FX and CFD brokers AxiCorp has acquired The UK trading technology business Star Financial for an undisclosed cash sum.
Star Financial, led by CEO Dan Moczulski, provides back and middle office solutions which allow brokers to offer multi-asset/multi-product platforms to their clients, moving them away from the MT4/MT5 silos that are so common in margin trading.
Dan, who on occasion writes for Good Money Guide is well known for championing the multi-asset approach to brokerage said of the deal:
“I’m delighted Axi liked our approach and wanted to invest in it”, and that “Given AxiCorp focus on continued growth and expansion, our expertise providing stable trading infrastructure in the multi-asset arena is a natural fit. We’ve now got the opportunity to bring our integrated service to thousands more clients around the world”
We understand that Mr Moczulski and Star Financial have been courted by several suitors in recent years, but that AxiCorp was the first of these to offer acceptable terms to Star Financials management and existing shareholders
By acquiring Star Financial Axicorp will of course gain access to the multi-asset, multi-platform technology that is Star’s stock trade, which it can roll out to its own clients. It also becomes a player in the UK and European B2B and institutional markets, as it inherits the existing Star Financials client base of brokers and wealth managers.
On top of all of that, however, AxiCorp has now diversified further into the Fintech space through the acquisition.
One of the biggest criticisms of FX brokers is that they lack their own proprietary technology, and in many cases that they are little more than a marketing machine reselling other people’s technology and liquidity.
AxiCorp’s Chief Executive Officer Rajesh Yohannan pointed out that Axi had already been moving away from that traditional and limited business model saying that
“Most obviously this approach greatly strengthens our end-to-end service and makes Axi a more compelling choice for traders – for example, the addition of Star immediately gives us greater flexibility with what we can offer IB partners and affiliates – but it also encourages future business investment, and that We view this as a partnership, not an acquisition”
The deal will also reunite two former colleagues as Axi Corp’s Director Sanjeev Joshi and Star Financials Dan Moczulski are both IG alumni.
What about Star’s existing clients?
When we spoke to Dan Moczulski this morning shortly after the news broke about what this means for existing clients of Star he said:
“I think it is fair to say there have been some nerves on my behalf as to how existing clients would receive the news, but I’m pleased to report that everybody seems to have taken it well. With the financial security of a major global player behind us, it means perhaps any vendor security risk our clients may have felt is mitigated, and Axi plans to invest in the product range, whilst remaining a client, so other clients will benefit from any advancements.”
Are Forex only brokers beginning to understand they need to expand into other assets?
On whether this is indicative of forex brokers accepting that they need to offer wider market coverage, Dan had this to say:
“I think it shows two things. Firstly, you are right, it illustrates how important it is to offer 1000s of products to trading clients, More trading opportunities, more trades. I think it also illustrates a second point, the importance of owning your client’s journey. It’s too risky to offer your clients exactly the same trading experience that every other broker does. We will empower Axi, and others to really define what they want to be to their audience. A unique trading experience for every unique trader.”
Of course, AxiCorp has also been in the press for different reasons lately as the firm is in the midst of an ongoing regulatory issue in Australia. Where it is in dispute with ASIC, the Australian financial services regulator.
ASIC recently announced a suspension of AxiCorp’s Australian license. AxiCorp appealed that decision through what is known as the administrative tribunal, who have put a stay on the suspension, pending a final review. That means that AxiCorp can continue to operate.
ASIC issued the suspension on January 2nd because it found shortfalls in several key administrative areas within AxiCorp’s Australia operations.
If the suspension were to be reinstated, then the revenues generated by Star Financials existing business might have come just at the right time for AxiCorp.
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Richard founded the Good Money Guide (previously Good Broker Guide) in 2015 and has been a broker for 20 years most recently at Investors Intelligence and previously a multi-asset derivatives broker at MF Global (Man Financial). Richard started his career working as a private client stockbroker at Walker Crips and Phillip Securities (now King and Shaxson) after interning on the NYMEX oil trading floor in New York and London IPE in 2001 & 2000.