ETX Capital Risk Director Speaks on Risks: Opportunities or Threats?
ETX Capital is a fast-growing, dynamic financial spread betting and CFD trading company based in the City of London. It provides investors with unrivalled levels of customer support from friendly, knowledgeable staff, all delivered with the utmost client confidentiality.
Nicolas Gavriel is the Risk Director for ETX Capital. Nicolas started his career in 2012 as an engineer but he soon moved into financial services. After completing his Master in Finance from the LSE he joined an investment bank where he got involved in regulatory capital and investment banking projects. Although he assumed various roles during his career, he specializes in Risk Management and Governance.
Fazzaco: Hi Nicolas, thank you for joining Fazzaco! Could you please introduce yourself and what you do at ETX Capital?
Nicolas: Thank you for inviting me to this interview. I joined ETX Capital a few weeks ago as a Risk Director, operating from Cyprus. My role is to implement and build on the existing risk management framework of the Company.
Fazzaco: CFDs trading is highly risky because of its high leverage. What are the challenges to the risk management of such trading, from the perspective of a risk director?
Nicolas: Let me start by saying that ETX Capital offers traders thousands of CFDs, providing them with more opportunities and more flexibility and ways to trade. CFDs are complex, leveraged financial instruments that allow investors to benefit from rising and falling prices across a broad spectrum of financial instruments, including forex, equity, commodities, and cryptos. The leverage magnifies potential profits and losses and consequently it magnifies risks. Market risk is an integral part of our industry. Price fluctuations may greatly affect P&L if not properly hedged. Technology is another key area. We rely heavily on technology to offer the best possible service to our clients. Therefore, system availability and accuracy are critical.
Fazzaco: Why did you roll out your own platform, ETX TraderPro, while you provide customers with MT4 as well? Which platform do customers prefer?
Nicolas: We always strive to empower our clients and deliver a great trading experience for them. With the end user in mind, we developed TraderPro, an award-winning trading platform that empowers traders to stay ahead of financial markets with integrated platform features, advanced research tools and a powerful charting package. Nevertheless, we still offer MT4 because we know there's no one-size-fits all and despite TraderPro being the preferred platform, due to the user-friendly interface and advanced features, we want to cater to every kind of trader, and that includes the more traditional MT4 user.
Fazzaco: What factors should a broker consider for risk management purpose? Will the recent crypto fever bring more challenges to brokers?
Nicolas: This is an excellent question. It gives me the opportunity to define risk and clarify the purpose of risk management. Risk is the effect of uncertainty on objectives. It can be a positive, negative or both, and result in opportunities or threats. Therefore, the role of risk management, is to allow the business to pursue its strategic objectives in a controlled and well-informed environment. In this context, the risk management function considers any factor that could potentially harm or benefit the company. For example, apart from the market and technology risks we discussed earlier, the risk management function considers among others business risk, compliance risk and operational risk. The change in client preferences, competition and regulations are just some of the factors examined for risk management purposes.
The recent crypto fever is an example of a change in client preferences. More and more people every day want to trade cryptos. It’s certainly a challenge for every broker who want to present its clients with any opportunity to trade on their favourite instruments. Not only cryptos are very volatile instruments, but one should also consider price feed, liquidity and custodianship.
Fazzaco: Is there any plan for ETX Capital to roll out crypto products?
Nicolas: ETX Capital is committed to provide its clients with the next trading opportunity. Our clients can currently trade CFDs on Bitcoin, Ethereum, Litecoin and Ripple. We constantly assess our product offering to ensure that our clients have access to the products they want.
Fazzaco: Why did ETX Capital cancel inactivity fee?
Nicolas: At ETX Capital everything is about delivering exceptional service to our clients at every step of the way. We want our clients to trade only when they see an opportunity and not to feel pressured to trade to avoid inactivity fees.
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