The New Trading Era

Daniela Egli was recently appointed as Cyprus CEO and Group COO of retail broker Skilling. Here, she talks to GOLD about the differences between established online brokers and the so-called ‘neo-brokers’, Skilling’s own rapid growth, and the challenges she faces in her dual role.

 

By Adonis Adoni | PHOTO by TASPHO

 

Tucked between bustling Athalassa Avenue and rows of retail shops is Skilling, a young trading broker with Scandinavian credentials. One morning last month, I drove to the company’s offices to meet their newly appointed Cyprus CEO and Group COO, Daniela Egli.

Retail brokers – and especially the new generation that the industry has dubbed ‘neo-brokers’, which offer distinct products – prospered during the pandemic. According to the independent French stock market regulator AMF, the percentage of transactions per quarter via these brokers skyrocketed from just under 10% in 2018 to 21.8% in 2022,. Similar results can be found across most data aggregators. This can be partly attributed to young people (the average user is 36 years old) taking bets with their economic payment cheques in an effort to make ends meet during two years of government-imposed lockdowns: it appears that young people are more willing to throw the dice in the face of adversity.

This new generation of brokers offers trading and investment services via simplified apps – it has, essentially, gamified trading. On top of that, these platforms offer a product called copy trading, which enables inexperienced traders to follow the strategies of their savvier counterparts. Put together, these two elements have enabled trading on the go; no wonder millennials are flocking en masse to these brokers.

Inside the Skilling office, which takes up one floor of the building, two employees were analysing graphs on their computers, while Nirvana’s Smells Like Teen Spirit played in the background. On the wall was a framed banner that read: Make the switch. Get more. Trade better. At a certain point, from one of the conference rooms, a swarm of employees emerged. A melting-pot of cultures and fashion statements, which ranged from short cargo pants to buttoned-up plaid shirts. This was a millennials’ company: young, vibrant and with little concern for formality.

Skilling arrived in Cyprus in 2016 and spent the first couple of years fine-tuning its proprietary platform, while going through the laborious process of acquiring a licence from the local regulator, CySEC. Having officially launched in 2018, it now offers more than 1,000 forex and CFD instruments, as well as shares in popular companies and cryptos.

The interview took place in one of the conference rooms. When Egli went to bring me a glass of water, I couldn’t help thinking that others in her place would have ordered someone else to do it. Upon her return, she placed the glass of water in front of me and sat behind a laptop.

“I have my cheat sheets here,” she said, laughing.

“That’s perfectly fine,” I said.

“So, we are a Scandinavian fintech company; I have to mention that, because we are proud of our origin,” she said.

“Why Cyprus, then?” I asked.

“Cyprus is a hub for our industry, right?” she replied, as a matter-of-fact.

As of August 8, 2022, CySEC regulates 227 investment firms, of which the vast majority are involved in online trading. Over the years, this has spurred the creation of an infrastructure that fosters a favourable climate for new entrants. In Egli’s own words, “Cyprus is the go-to place in the European Union” for companies like Skilling.

In an attempt to get her talking about the core differences between established brokers and ‘neo-brokers’, I mentioned to Egli that, according to the great rumour mill, people in the trading business have two distinct characteristics: they hold grudges and they don’t like change much.” She looked at me wide-eyed. “I haven’t heard about the first characteristic,” she said, “and while I can understand that there might be some traditional brokers that are not very flexible, I think they have no choice but to start innovating.”

Besides demonstrating a seeming attachment to the past, the established players have moulded their product offering around savvy investors, which has allowed them to accrue high fees for their services, often at the expense of transparency.

The new generation of brokers, on the other hand, sets lower barriers to entry and lower costs overall; indeed, some advertise they are commission-free. Of course, nothing is ever free and brokers that care about investor protection make sure they disclose that to their users. There is also a technological chasm: while many established online brokers are still reliant on third-party technologies, like MetaTrader4 (released in 2005), companies like Skilling spent years working on their own tech before hitting the market. This allows them to scale fast, particularly when adding new instruments like cryptos that come with weird pricings. And, considering the gravitational pull this industry segment has on millennials, the ability to respond swiftly to demand can make or break any broker.

“We believe in trust, transparency and equitability – these are true Scandinavian values,” Egli said, by way of explaining the demarcation line between Skilling and its peers.

“How do those values translate into your business?” I ventured to ask.

“Well, it is in the way we interact with our clients,” she replied.

In August 2022, CySEC released an information campaign that warned against the gamification practices of trading apps. Some of these practices might include reward animations (imagine confetti exploding on your phone screen), an emphasis on top-10 lists, highlighting significant price swings and even lottery systems. Regulators have expressed concern that such gamification trivialises trading and, by extension, ramps up the risk for investors, especially those who are not particularly experienced. And, if we follow the hypothesis that people tend to take more risks during difficult times, then that concern slowly becomes a real issue.

To her credit, Egli agreed that investor protection is the ‘be all and end all’ of the company’s business model. “This is why we disclose everything – we want our clients to trust us and believe in us,” she stated. To do so, the company has added communication channels like Telegram, WhatsApp and Messenger. On top of that, what truly sets Skilling apart is its investment in branding. Indicative are the various partnerships the broker has formed, which included Fulham F.C., Aston Villa F.C. and chess genius Magnus Carlsen. “For us, having a good, strong brand is very valuable for the long term,” she explained. “Other brokers have a short-term strategy – maybe they have restrictive budgets – so they will focus only on having a market making model, or offering a white label platform, before they commit to investing more into their branding efforts. Not us, though.”

2022 has been a good year for the company. It saw a triple-digit rise in users, trade volumes and revenue, and a second funding round, led once again by Scandinavian investors, capped at €10 million, to add to the €18 million raised in the past. “This proves the trust that investors have in our company,” she noted. “What spurred our growth in particular during these last couple of years has been adding new products.” Copy trading was one of those products. “It’s all transparent,” she reiterated. “You see what others are doing, what they are investing in …You see all the stats relating to a particular strategy and if at some point you are not happy with the performance, you can always change the strategy.”

Daniela Egli is the latest addition to Skilling’s c-level roster, which started with the appointment of industry veteran Michael Kamerman as Group COO back in 2020. Prior to joining Skilling, Egli had spent some 15 years in Cyprus’ financial services sector, including roles in companies like MeritKapital, Blackwell Global and Fxview, where, as Managing Director, she oversaw the broker’s ownership change to the Finvasia Group. “Indeed,” she said, “Skilling recognised that, in order to grow exponentially, you need top talent. So, we’ve hired very experienced people that come with best practices and experience. This will help us invest in all the right areas, from product development and customer excellence to the company culture. We also recognise that having the right people offers us a competitive advantage.”

For her part, Egli saw in Skilling a chance to work in a company on the verge of exploding onto the scene, alongside industry experts from whom she stood to learn plenty. “Knowing that I would be joining at the growth stage, where I could contribute a lot in scaling the business to a new level, was very exciting for me,” she noted. “And witnessing a great company culture and a team working to achieve the mission of empowering the everyday trader really sealed the deal.” In addition to her duties as CEO of the Cyprus office – Skilling also has bases in Malta and Spain – Egli serves as Group COO. By her own admission, the dual role comes with plenty of challenges, especially when it comes to time management. This is, after all, her first stab at both positions. “However,” she noted, “the two roles are very much connected. Also, I am grateful to work with a great team, which ensures that the day-to-day business runs smoothly and, challenging as it may be, no two days are the same, which keeps me on my toes and helps me be creative and keep learning constantly. I’m excited to be working with a group of talented, committed and hardworking individuals, who have already taught me a lot. This has helped me enhance my leadership, technical and operational skills.”

Having spoken to Daniela Egli, I sensed that this new era in trading is in equal parts both exciting and frightening. Indeed, the sleek platforms of the neo-brokers’ capital markets have now opened up to the general population, which clearly comes with its own risk. Readers will doubtless remember how, in 1999, at the peak of the Cyprus Stock Exchange boom, when everyone, from farmers to retirees, was buying stocks, some Cypriots reportedly grew richer by £10 billion in a matter of months. Then, everything came crashing down. Against the present backdrop of an apparent increase in risk-taking behaviour, will millennials – and Gen Zers for that matter – commit the same sins as their fathers? Will companies like Skilling, which algorithmically cut through the noise surrounding trading and pride themselves on building trust with their traders, halt such an outcome? Time will tell but this particular neo-broker appears to be making all the right moves.