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The Brokers (re) Evolution: The CEO's reply

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Peter Furrer, President at GFX Group SA: "GFX Group SA is currently not affected by these changes"

Fri, Sep 21 2007, 14:00 GMT
by Marina Schiaffino

FXstreet.com

Peter Furrer, President at GFX Group SA has answered the second questionnaire that Francesc Riverola, CEO & Founder of FXstreet.com, sent regarding new NFA requirements and their potential impact on the FX industry. [ View the full interview ]

1 - What is your opinion on the recent NFA regulatory changes? How do you view the implementation of these new measures for FDMs?

GFX Group SA is currently not affected by these changes.

2 - The new proposal also calls for the use of proper and uniform accounting methods and tightens internal controls. Do you think this measure could affect your company's business in some way?

Yes, in 2 ways – 1st from an expenditure point of view. Operational & controlling costs will increase substantially in the industry and 2nd from a client confidence point of view. Transparency & tighter controls provide the customers with a higher level of security comfort.

3 - Do you consider these measures could be a breath of fresh air that could result in more investors joining the FX Market?

Yes, see above.

4 - Switzerland has recently started a similar process, what is your opinion about it?

Highly supportive. General Financial Market reputation is at stake without some control & supervision. Regulators focus should be on security of investor funds without an extravagant and expensive bureaucratic process.

5 - Would your company be on the bid side if some firms were not meeting new requirements? What is your company's policy on acquisitions of smaller firms?

To be reviewed on a case-by-case basis – but reluctant to look at companies that could not meet the new requirements. Interest depends on possible market perception and - penetration.

"The regulatory requirements will force some FX traders to join forces with competitors to get a grip on costs."

6- How do you see the M&A market in the Forex industry? Do you expect important corporative movements in the next months?

Not in the next few months but - especially on a technical / operational basis - within the next year or two. The regulatory requirements will force some FX traders to join forces with competitors to get a grip on costs.

7 - For many, the very business model of Forex brokerage firms that needs to be decided is whether or not such brokerage houses can take opposite trading positions to those held by their customers, i.e., trading 'against them', which contradicts traders' well-being. What is your company position on this? How do you hedge your customers' trades?

The current business model of brokerage houses taking opposite trading positions is a question of taking a calculated risk and having enough capital in order to absorb a potential trading loss. Prudent risk management is the essence. We are hedging in the market.

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Published on  Tue, Oct 2 2007, 15:27 GMT