Tell us quickly what you do and who you do it for?
Hi, My name is Dan Moczulski and I am the CEO of Star Financial Systems. I have been in the spreadbetting, CFDs and FX business for what feels like a thousand years, but it’s actually only 18 years ago when I joined IG Group as a Junior Dealer. In the end I was their New Business Director, leaving to be the Sales Director of City Index (now Gain Capital).
Since then I have held posts at various brokers and tech start-ups within the sector, leading me to be in my present position at Star Financial Systems a tech firm providing brokers with dealing platforms in order to facilitate their client’s trades. I have been here 4 years.
What’s the difference between Star and an off the rack white label solution?
Ah – good question, and one that kind of illustrates our position in the market well. We are not a broker. We are a software firm and we make dealing platforms, and dealing infrastructures bespoke for each one of our clients.
A white label is where an existing broker gives another firm their own platform, but change the colours and branding. Any firm who chooses a white label will be constrained to the service that the Broker provides and be unable to control their experience for their clients.
Having said that – a white label is a great introduction to any firm hoping to offer CFDs and Spreadbetting to their clients, but it has limitations. Brokers who use us can choose every aspect of the client experience, from the platform they trade on, to the products available, to the counterparties they use.
Where I like to think a client of a white label broker can guess who the ultimate broker is, and don’t think that is possible with us. Each broker uses us differently – some offer MT4, some offer our interface, and some have built their own, but use my technology to power it.
I’d like to think a decent number of your readers use our systems but don’t know it!
Of all your clients, what do you find is the most popular asset class?
We specialise in multi asset solutions. Brokers who use us offer their clients thousands of different markets including individual stocks, Indices, Commodities and FX.
Our client base is truly global, with each territory tending to trade their local index the most, then their local currency crossed with the dollar, and then their local stocks, and finally – the global indices, global FX crosses, and global stocks like the dow and apple.
In aggregate this means the global markets get the most business, but I feel a broker should offer the local market in order to get clients to trade with them.
What’s your view on focussing on a single asset class versus running a multi asset brokerage?
Well – I think it’s a no brainer. Clients trade volatility, and volatility is not always in one asset class. Even cryptos will calm down at some point! You need a broker who can offer you as many trade opportunities as possible.
You do not want to be trading something just because there is nothing else to trade on your platform. From a traders perspective I do think it’s important to only trade what you know and are comfortable, but hopefully if your brokers offer a wide range of products that should be possible.
Whilst most online brokers limit themselves to the most popular FX, index and commodity markets, how equity focussed are you?
Well, as I mentioned, our strength is allowing brokers to offer 50,000 markets to their clients, and so by nature, that means we offer a lot of equites. Maybe there are 40 cross FX pairs that people care about, maybe 20 Indices. However there are thousands of equities people care about globally.
Will you be adding cryptocurrencies to your offering and what’s your long term view on crypto as an asset class?
Brokers can choose the products they offer their clients. Quite a few of my brokers have enjoyed a boom in business through offering cryptos through my platform. I honestly believe that this is like the early privatisations ( BT and British Gas) in bringing new people to financial markets.
In terms of my view as to where it is going, well it may sound like a cliche but it’s clear that the blockchain itself is the real technology win here.
It’s interesting now that the actual flavour of the month coin changes quicker than the month! Bitcoin traders are disappearing , being replaced by Etherium, Litecoin, and Ripple. As I mentioned before traders trade products based on movement not on stability, so I don’t think this a terrific indicator into what will establish itself in the future.
I see three attributes to a coin, one ease of transaction, two store of value, and three liquidity. I don’t think any one coin has been able to satisfy all three, and until crypto regulation is established, the final one, liquidity will always be an issue.
What’s your take on the new reduced leverage and negative balance protection for retail traders?
I saw an article the other day with regards to the sugar tax in Scotland pushing the price of sugary water up to the point that people are now substituting it with alcoholic drinks, rather than the intended reaction of going for the low sugar alternative.
I fear these new regulations will have a similar effect. Leverage restrictions mean clients will seek more exotic products, jurisdictions, or investor classifications. Negative protection means that the broker takes the risk if the market jumps through the “zero level” market encouraging them to take the other side of the position.
The annoying thing here to me is that all the issues that the regulatory bodies want to stamp out ( and rightly so) could have been done more effectively with existing regulation. Unethical affiliates could have been stamped out with MIFID I and II. It used to be standard FCA requirement that firms couldnt advertise in a medium that is unsuitable to trading audience, and yet nothing is done as football teams and personalities are sponsored.
On-boarding of unsuitable clients could have been restricted if regulatory bodies just looked into the on boarding mechanisms of unethical 500:1 leverage brokers and used existing rules.
Also, how do you think brokers will have to adapt to the new regulations?
Another good question. They will have to adapt. I imagine we will see consolidation as the costs of compliance increase, and the number of people able to open an account decrease, and despite my dislike of the proposed changes, I can see brokers having to move to platforms such as my own that can accommodate the new changes.
Things like have margin per position rather than per account effectively mean 90% of the brokers out there will have to offer a new platform.
What’s your view on client acquisition channels in the industry and what changes do you expect to see in financial marketing over the next year.
I just don’t know – my view on this has been totally turned on its head over the last 6 months. I’ve always viewed marketing of financial products as sedate, unimaginative and boring. Whoever spent the most got the most clients.
However it was attracting clients from the same pot.
Cryptos have come along, and suddenly Coinbase is reporting 1 million new accounts a month with a client base exceeding long established brokers such as Charles Schwab.
I feel that women are underrepresented in financial markets trading. Scalable Capital reported that 62% of women did not feel they have sufficient financial knowledge to invest. Who markets to them?
How much consolidation do you see in the industry?
I think the proposed regulation if it comes in will make it inevitable. I also think it will be the tier 2 and tier 3 institutions that tie up, rather than by acquisition by the larger players. Large brands only want the “flow” or the clients, they have no need for any target’s brand or technology.
What’s next for Star, any new products or plans in the works?
We work with all our clients in order to continually flex to regulatory changes, and to make sure that our brokers can offer their clients the most interesting trading opportunities. Ultimately it is our broker’s clients that drive this.
Finally, what are your top three financial websites or apps you simply couldn’t do without on a day to day basis?
I’d like to say our own, as there are magnificent (!), but on the assumption I can’t.
- www.twitter.com rightly or wrongly it continues to break financial news quicker and more consistently that any established media outlet.
- www.scalable.capital I do believe anyone should be able to invest for the long term no matter what there financial knowledge. Scalable do it in the most efficient and simple way.
- www.revolut.com aside from its actual currency product, which I consider to be excellent, as a fintech CEO I find their standards of UX and product roll out to be inspirational.
Dan Moczulski is CEO of Star Financial Systems, to find out more about their brokerage solution view their website or request a demo here.