With 2023 being a year that requires flexibility and strength, staying educated can be essential to making the most of key market drivers and improvements with your brokers. We’ve identified five key patterns that could significantly impact your exchange organization.

Retail trading is already being affected by the rise in the use of alternative payment methods (APM), tighter regional regulation and the growing importance of emerging markets. New digital assets have the potential to help revive the market, although there may still be uncertainty surrounding cryptocurrency investments. Plus, we’ve included some advice at the end to help you meet the ever-changing demands of your belt-tightening merchants amid the cost-of-living crisis.

Adoption of APM by Retail Brokers

Continued adoption of APM has the potential to become the norm in the future. Digital wallets are leading this shift away from cards in global consumer payment preferences, despite regional differences. Digital wallets are the clear favorite in the Asia-Pacific market, where they accounted for almost 70% of online payments in 202112. By 2026, their use is expected to increase by a further 56% worldwide.

These payment methods were quickly adopted by retail customers who had high expectations of other online industries. As a result, retailers consistently expect the same level of simplicity, choice and convenience throughout their shopping journey. For example, fixed installments are opening up across the board, with around 72% of the total population expected to move to instant installments in the near future.

Your option?

By giving your merchants the APM they prefer, you can keep them at the center of everything you do. We can help you with the right combination of installment options with the ability to increase recognition rates and drive transformations – all through a solitary seamless connection. We can help you customize your customer experience by providing the right payment products and services.

Stricter regulation

There were no significant regulatory reforms in financial services last year. However, particularly in the trading sector, this may not be the case in 2023. For example, patchy passport requirements across the European Union (EU) have revealed a potential oversight gap in monitoring cross-border trading, suggesting that current regulations may favor foreign investors. . The European Securities and Markets Authority (ESMA) reviewed the situation and recommended adjustments5.

ESMA’s review may point to increased regulation or at least enforcement of existing regulations. Standardization of reporting under the European Market Infrastructure Regulation (EMIR) would increase under the new guidelines, which could ultimately reduce costs for brokers and regulators6. In April 2024, the new standards will enter into force.

From October 2024, traders operating from Australia or tolerating or targeting Australian retail clients should ensure compliance with all Australian Securities and Speculation Commission (ASIC) requirements. A new report says ASIC is much more likely to intervene to ensure foreign governments comply with Australian law. This may cause external companies to merge with those holding Australia Financial Services (AFS) licenses or apply for their own7.

Regulators that are stricter and more consistently enforced could lead to increased confidence among traders in 2023, even though they appear restrictive to some.

Commercial brokers

Commercial brokers may consider entering emerging markets in Africa, Asia and Latin America8 due to rising inflationary pressures, ongoing geopolitical conflicts and an already saturated market in the UK and Europe.

Africa is home to nearly 1.3 billion people, roughly four times the number of people in the United States9. In addition, the continent is experiencing rapid digitization and economic growth as more and more people have access to the Internet and mobile phones10. One country to watch is Kenya, where the Capital Enterprise Sectors Authority recently granted administrative support to a neighborhood brand11 that can now operate as an Internet FX broker. Nigeria could possibly surpass South Africa as the largest retail foreign exchange market on the mainland; However, retail trading is currently unregulated and may involve unwelcome dangers12.

In addition, many Asian business sectors have enormous potential for development. For example, the Philippines has a government that welcomes foreign investment and one of the fastest growing economies in the region13. With its steady growth and recovery from the pandemic, Indonesia could be another strong market for traders14, despite pressures on the global economy.

Latin American business sectors have been earmarked as major regions for expansion also in 202315.

Experts predict that economic uncertainty will not be as severe as in the United States17, despite the fact that political instability is likely to persist in the region16.

4. Crypto at a Crossroads

These recent declines and higher-than-usual cryptocurrency market volatility may prompt traders to consider whether a recovery is possible in 202318. As a result, brokers may find themselves at a crossroads where they must decide whether to fully oblige by including cryptocurrencies in their portfolios, offer them as an APM or settlement method, or exit the market altogether. Naturally, there may still be risks involved; in any case, tolerating and exchanging computer currency standards could mean a place of contrast for your organization.

Although cryptocurrencies have not yet been widely used—only 6% of Americans19 owned or used them in 2022—use has been steadily increasing in recent years. With the commitment of more guidelines for business this year20, more sellers and representatives may consider cryptocurrencies as a significant resource.

Private stablecoins and central bank digital currencies (CBDCs) could also open up new investment opportunities through pilot programs. As CBDCs are linked to government institutions and non-computerized cash, they could prove a chance for more usual legislative oversight21. WorldpayTM became the first global merchant acquirer last year to enable merchant brokers to accept settlements in USDC, enabling them to benefit from blockchain and digitized funds22.

5. From the trader’s point of view

From a trader’s perspective, traders are likely to demand higher value for their investments in the face of economic uncertainty and rising inflation. By focusing on educating traders about alternative investments and safe assets and embracing the power of automation, brokers have been able to navigate this environment.