DESPITE the Asian Development Bank lowering its growth forecasts for emerging nations in the region earlier this month, European brokers are launching Asian-based subsidiaries in droves (forex and commodities brokerage MIG Bank, for example, opened a Hong Kong arm this year).
But Anil Bahirwani, co-founder of the Indonesian foreign exchange broker MIFX, is bucking the trend. Last week, he launched Monex Capital – London’s latest provider of FX and contracts-for-difference trading services. The firm claims it is one of the only in the industry to offer Tradable – the open-source apps-based trading platform.
KNOWING YOUR INDUSTRY
Chief executive and founder Patrick Latchford was an obvious choice for Bahirwani as he searched for a business partner to run this new venture. Latchford is an industry veteran, with over 15 years’ experience re-engineering companies. He previously worked at Finspreads, which he “transformed from a £25m to a £60m market cap before it was sold by IFX to City Index”. He then did a similar job at CMC Markets, helping to build the business.
It is an industry in which he has made “plenty of mistakes to learn from”. One of his former employers spent a fortune building an industry-strength platform – at one point, the company had 20 developers working at £1,000 a day each.
Now, he knows technology costs must be “strictly controlled,” and Monex doesn’t have its own online platforms. “It’s not our background,” says Bahirwani. “We don’t want to waste time and money building a sophisticated IT infrastructure when we can just outsource it.”
By 2006, Latchford felt he knew enough about the industry to start up alone. But he encountered difficulties finding a financial backer, says the technology solutions were not up to scratch back then, and that the requirement for capital was far greater. He tried a couple of management buy-ins, but found it “impossibly hard work”. Soon after, he was approached and hired by CMC’s Peter Cruddas.
Bahirwani’s entrepreneurial career has seen setbacks of its own. After studying economics and finance in Australia, he joined his father’s brokerage as a chief dealer. But the company was forced to shut down after the 1997 Asian financial crisis, and Bahirwani became a business development agent for another, larger firm. By 2000, he was ready to start up alone.
MIFX is now third largest forex broker in Indonesia. In 2003, it became one of the first brokers to be regulated; in 2005, it started online trading – which saw the volume of trades increase by 500 per cent over two years.
International expansion seemed like a logical next step, but Bahirwani was concerned its Indonesian origins would prevent it from being viewed as a credible broker, and decided to look for regulatory approval elsewhere.
So why London, especially at a time when so many companies are looking East? “Approval from the Financial Conduct Authority would ensure the business was seen as legitimate, and wasn’t viewed as high-risk by banks.”
And 30 per cent of all global forex trading takes place in London. What’s more, the retail forex market has been relatively untouched by the problems facing other financial institutions, making it an attractive industry for a new entrant.
On the flip side, competition is fierce. Monex Capital is one of a number of new forex companies offering the same products, and trying to get market share from the big players. “We built a name from nothing in Indonesia. Competition is life. But if we can give a bit more service and care than those larger companies, we can slowly penetrate the market,” says Bahirwani.
“We’ve had a one-size-fits-all marketplace for far too long,” says Latchford. “We’re now giving tech savvy traders a brand new way of looking at the front-end trading experience.” The Tradable platform will enable clients to develop their own applications and select from a range of trading tools. In addition, the firm offers a binary options trading platform and Meta-Trader 4 – the platform currently used by 45 per cent of the world’s FX traders – for the less technologically-minded client.
The duo are reluctant to discuss targets for 2014: they are looking long term – and want to create a “sustainable revenue stream,” rather than being an overnight sensation. The company has not sought investment – it has been funded by Bahirwani, another Indonesian investor, and Latchford has a small stake.
That said, Latchford says he “watched with interest when Plus 500 floated at over £100m on the alternative investment market earlier this summer” (like Monex Capital, that FX company moved its headquarters to the UK this year). He also tells me they will likely expand into the UK spread-betting market in the future. It is safe to assume, therefore, that the pair have big long-term plans. They are certainly excited about Monex’s prospects. “My advice to future entrepreneurs is that when you’re excited or nervous about something, the default answer should be yes,” says Latchford. And Anil’s? “Do it with passion. And if you like what you do, there will always be a way to solve the problem.”
CV ANIL BAHIRWANI
Company name: MIFX, Monex Capital Markets
Company turnover: Not disclosed
Number of staff: MIFX – 350
Job title: Founder, MIFX Indonesia; Non-executive director, Monex Capital
Born: Cirebon, Indonesia
Studied: Economics and Finance, Curtin University, Australia
Drinking: Jonnie Walker blue label
Favourite business book: I don’t have time – too many company documents to read
Talents: Thinking games, like bridge and poker
Motto: “Do what you enjoy, and with hard work and passion you will be successful”
First ambition: I always liked the idea of having a private jet
Heroes: My father
CV PATRICK LATCHFORD
Company name: Monex Capital Markets
Founded: February 2013
Company turnover: Projected turnover for year one: £1.2m, plus 500 clients
Number of staff: Nine
Job title: Chief executive
Lives: Wadhurst, East Sussex
Studied: Economics at City University, MBA at Cranfield School of Management
Drinking: It depends on the company I’m in, though I find it hard to say no to a good bottle of wine
Eating: Italian (any time) or Japanese (when I’m out for dinner)
Reading: The Business of Being Social, by Michelle Carvill (for work), and Chickenhawk, by Robert Mason
Talents: According to my teenage children: taxi driver
First ambition: To move to London as fast as possible
Motto: “Get on with it, action this day”