Trading and the Sharing Economy
Brokerages Distributed Model — Phase 1
You’ve probably heard of the sharing economy. If you haven’t, you’ve definitely heard of Uber (transportation), AirBnB (lodging) and a host of other companies, including Didi, which beat Uber at its own game in the Chinese market. Disruption is a term thrown around loosely whenever new technology arrives on the scene, but the rate at which these companies have flipped entire industries upside down is astounding. If you don’t believe me, ask your local taxi driver.
So what does renting out your flat, or hailing a ride from your mobile have to do with Banking, Finance, FinTech, whatever you want to call it? The answer, everything.
Let’s face it, banks and financial institutions don’t exactly have the trust of the people. Global financial meltdowns, bailouts, payouts, etc. have gone a long way to making the general population feel like the “have nots”. Like an exclusive party that they haven’t been invited to, and they won’t be expecting a call anytime soon (well, ever).
I’ve worked in the spot Forex and CFD brokerage industry for about 20 years working on the retail, institutional, management, and product sides in different capacities, and previously started another technology company, tradingwheels, that was focused on helping a trader work on their emotional intelligence in a real-time trading environment (which I was giving away for free).
It’s not an understatement to say that, for years, almost nothing truly innovative has happened in the industry. Sure, pricing is tighter, mobile apps are more prevalent, bandwidth is abundant in many areas, but the business models are largely the same. The ads are the same, the message is the same: Does “trade the largest market in the world, 24/5.5 days a week, and get tight spreads” sound familiar? Yawn!
Compare that to the transportation industry. According to Reuters, New York City cab drivers have seen their monthly leasing income drop as much as 60% in the past few years. Now that is disruption and it doesn’t even touch what is happening with energy, housing, online consumer goods, food, or even space travel!
During this time I have been fascinated in what is also happening in the cryptocurrency space. The openness of a distributed ledger and how it also leverages the assets (computational cycles) of others in the network to make it stronger. This type of model made complete sense for something similar to be brought into the OTC brokerage space not only as a tradable asset or technology with its own set of advantages (much has been written about this) but as a business philosophy as a whole. Treating traders and their volume (akin to computational cycles) as a valuable asset to make the network of traders, as a whole, stronger, and being as transparent as possible (a distributed ledger) without jeopardizing privacy issues could work and scale quite well for the benefit of everyone in brokerage.
So this is the basis for my new company, EQL-X, LLC (“eqlx”).
First, let’s get into transparency. There has been a fog of secrecy surrounding the OTC brokerage industry. From the outside (trader) looking in (broker), it feels like it’s done on purpose. I’m not saying that companies do this intentionally or that is it bad per se, but wouldn’t it be radically different to open the books so to speak? Just show how much we make, how much we spend, what our core costs are from our liquidity providers, if we outsource our risk to a third party, the list goes on. This is in the same vein as a distributed ledger of sorts and is a new way to think about true transparency- and something a lot of legacy brokers do not want to talk about.
Second, share the wealth (compliance hat time- “when or if there is wealth or profit, of course”). If my company, eqlx, can be transparent with the amount of funds coming in (and out), why not take it a step further and reward all of our awesome active traders (what we call “the collective”) their share of the 50% net profits we give back to the collective for as long as they continue to be an active trader? This, though with very apparent differences, is a similar concept to the mining reward in a proof of work (POW) model I saw in cryptocurrencies, and is the most direct and transparent way, I believe, that showcases the seriousness in how eqlx values our ecosystem (the collective) of traders.
There is much more to discuss about our model, and of what we will be introducing in the weeks to come, but I look forward to building this exciting new brokerage model right alongside you.
You + Us = Awesome,
This is eqlx.
Matthew Carstens
CEO & Co-Founder
eqlx
For details on how individual active traders are valued for their potential profit share please go to: http://eqlx.io/the-difference/
