The GOP Debate and the Futures Industry

Posted by Rick Tomsic on November 2, 2015 at 8:30 AM
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Interested in the headline from CNBC, Your Money Your Vote, I tuned into the GOP debate Wednesday night like all Americans hoping to hear something positive for startups and small businesses and how it might help shape our new venture.

 

When I watched the debate it felt like I was in The Twilight Zone. I heard a lot of discussion about a government too big. I heard the candidates talk about the fact that, while no one wants a bank “too big to fail”, the cost of meeting the increasing regulatory requirements are forcing banks to consolidate. They spoke about small businesses being unable to compete and only the large firms and individuals who had power lobbying groups could effectively navigate this environment.

 

Were they talking about the government or is this the scenario in the futures industry?

 

It is no secret that since 2008 the United States has been in a near zero interest rate environment. Futures brokerage firms traditionally made the bulk of their earnings on interest rates. So with no interest rates firms felt financial pressures.

 

Furthermore, while this interest income stream went away, the cost of doing business skyrocketed with the additional regulatory burdens of Dodd Frank. This forced firms to consolidate to survive. This consolidation was the main focus, not innovations in customer experience or focusing on new technology.

 

The same issues that are facing our country are facing our industry. If we are going to generate growth in the country and in the futures industry we need more incentives for firms, especially new ones, to build and grow. This is still America and we would like to think startups can rise from nothing and have the same hopes and opportunities that a 1920’s immigrant had. As an industry we should lead change to generate growth.

 

After exiting the futures brokerage business in 2013 after a decade plus of running an online futures brokerage firm, I decided to re-enter the space in June of 2015 with our new venture, Tradovate. After a lot of research we determined that the futures space was ready for a new entry, especially an online firm that focused on cloud technology.

 

Tradovate is breaking the industry mold of the ‘consolidated FCM’ as the first new retail FCM to enter the industry in a long time. I think that the customer should have more, not fewer, options to choose from in the retail brokerage space.

 

Tradovate is bringing some healthy and long-needed new competition to market. With an innovative cloud-based trading platform and a unique business model, impacting the industry for the better and the customer is our incentive to lead change and generate growth.

 

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