OANDA, a large but quiet presence in the Margin Trading Products (“MTP”) industry, which is primarily spot FX, CFD’s, and some growing Binary Options traffic, recently appointed a new Head of OANDA Asia Pacific. The who and why is not what interests me; it is the location.
The MTP industry has faced a lot of regulatory headwinds in the last 8 years. As regulations toughen in one jurisdiction (USA), brokerage firms open up in other jurisdictions with looser rules. This had led to what I refer to as “regulatory arbitrage”, with brokerage firms spending resources to start the application process in far flung jurisdictions so they have their bases covered. It seems that eventually the regulators in each jurisdiction realize it is tough to keep up with the operators (see previous post) and they revert to stricter regulations based on larger prior jurisdictions.
But what interested me about the OANDA press release is the location of the new appointment. Asia Pacific is a tough region to nail down. Lots of different cultures, active in the north and south hemisphere, language barriers, etc. Traditionally firms would locate themselves in Tokyo (most brokerage volume in Asia Pacific region), or Hong Kong (traditional investment banking hub). But Singapore has seen more and more firms locating there. And recently I have been learning about Singapore’s regulations and policies. Singapore has principals-based regulation. And it is more centralized to the entire region of Asia Pacific.
OANDA’s decision to locate their Asia Pacific HQ there seals it for me. Singapore is the next global destination for the MTP industry. Expect to see many more firms registering in Singapore in the coming years.