Portugal – the surprisingly savvy financial instruments market with sophisticated traders

The British financial brokers Infinox has opened an office in Lisbon for its Iberian and Latin America expansion plan. Founded in 2009 and with a licence from the Portuguese supervisory authorities CMVM, Iberian operations regional manager Tiago da Costa Cardoso explains why Portugal’s capital was the perfect choice.

In May, a British brokerage house invited a small group of financial journalists to the British ambassador’s residence in Lisbon to announce that it was opening a branch office in Lisbon from which to expand its operations to the Iberian, Latin American and Portuguese-speaking territories.
The company, started by Robert Berkley in 2009, said it planned to offer a premium brokerage service, giving investors access to various global markets, assets and financial instruments at competitive rates.
“We want to help investors meet their financial goals and personal ambitions through a premium service that was transparent and reliable, offering dynamic and competitive products” says Tiago da Costa Cardoso.
And in case you haven’t heard of Infinox, the brokerage house already has a good track record in its relatively short history. In 2018, for the second year running, it was listed as one of the Top 100 private technology companies to enjoy the greatest growth in sales over the past three years, coming in at 15th place in the ‘Tech Track 100’ ranking.

Financially savvy young investors
Tiago da Costa Cardoso says that Infinox decided to enter the Portuguese market partly because the country is cost-effective but also because of the talent and high financial literacy of its professionals and its clients.
“Because of this high financial literacy there is also a high percentage of sophisticated traders. A lot of investors had bad experiences with some Lisbon PSI20 listed companies that went bankrupt which led them to try to better understand the market and the products instead of blindly investing in so-called low-risk products” he explains.
“We’ve seen a great increase of interest among the younger generation to diversify their savings in high risk products and to understand how to use them as well.”
But the decision is also strategic in terms of the company’s geographic expansion plans, particularly the Portuguese-speaking world Brazil, Angola, Mozambique and the other PALOP countries.
“Some people ask us why, if we are serving Iberia, didn’t we open up an office in Madrid – a much larger market with potentially more clients. Lisbon was a question of opportunity; the talent we had in Portugal and the opportunity to acquire that talent from other brokerage houses and the city’s cost efficiency all made Lisbon the obvious choice” explains Costa Cardoso.

Portugal – a strategic move
Another key reason for moving into the Portuguese market has to do with its strategic position next to Spain and its position as a hub in the Portuguese-speaking world – both in Africa and Latin America.
“Geographic expansion is one of the biggest projects for Infinox in 2019 where after opening the Lisbon office we’re also looking to open a new office in South Africa. Both are going to be hubs offering better geographic coverage for the company” he says.
“In Lisbon we are going to be dealing with Portuguese and Spanish speaking clients in Iberia and Latin America” he adds.

Solid background in Portugal trading
But Infinox didn’t just enter the market blindly. The market was well studied in advance and Costa Cardoso already had a wide working experience of Portugal.
“I’ve been working in the Portuguese market for almost a decade and seen my former broker XTB Online Trading rise from humble beginnings to become the biggest in Portugal. It’s a journey that I’ve experienced and one which, with the help of my fantastic team, we hope to replicate at Infinox” he says.
In fact, Tiago da Costa Cardoso started trading before he turned 18 while still at university doing an Economics degree. His first experience in the markets was trading Forex and he says that is where he “learned everything about technical analysis, and risk management” before going on to Lisbon-based XTB in 2011 where he became a Senior Broker and Team Leader before leaving in early 2019 to join Infinox and run its Iberian operations from the new Lisbon office.
“Currently, I am the Regional Manager for Portugal, Spain, Brazil and LatAm and my goal is to setup the branch and start developing our business across this region” he says.
“After many years of working in this sector, I believe the best way to invest your money is doing it for the long term. When it comes to markets, I trust in time rather than timing” he adds.

A small but talented team
At present, Infinox has a small team of six in Lisbon but has plans to grow the team to 20 financial professionals by the end of 2020 “as long as our road map is well planned and followed.”
“Our main focus in Lisbon is employing sales traders /analysts that can cover our whole region with different kinds of expertise across the products we offer from CFDs (Contract for Difference – a popular form of traded derivative enabling speculation on the rising or falling prices of fast-moving global financial markets) to stocks and futures” explains Costa Cardoso.
Infinox is also creating synergies in Portugal with partners here and overseas which they believe can add value to both parties. “Right now we are developing some contacts with other entities in a vast range of areas, but it’s early days and we cannot announce which areas and with whom at the moment.”
Infinox will also be offering a range of premium services with dynamic products with both CFDs and Futures on the most popular trading platforms Metatrader, CQC and Stellar, but is also developing its own platform the IXO which will be a complete solution that will offer traders all kinds of products to trade in addition to analysis and training.
“Regarding service, we are one of the few brokers in the world that can offer tailor-made services for each client to ensure they get the right products and level of service at the best possible prices. We offer a dedicated account manager to help our beginner traders to thrive in these markets, showing them how to carefully analise the market and through training” says Costa Cardoso.

The Brexit effect
As to the Brexit effect of Britain’s disorderly departure from the European Union without a deal (Hard Brexit), Costa Cardoso is not unduly worried. “I believe the market has already factored in the Brexit effect for a long time in terms of the weakening GBP value against the other currencies such as the dollar and euro, as well as the Footsie. The surprise element has already gone. As always, I would advise people to only invest in what they understand and in what they believe they can forecast” he advises.

Overregulation?
On the question of the Portuguese market, after the European Markets and Securities Authority (EMSA) placed restrictions on CFD products, brokerage firms operating in Portugal have seen the market in this area shrink to half of its trade volume.
The background is that ESMA agreed to renew restrictions on the marketing, distribution and sale of CFSs to retail clients in effect since 1 August 2018 and now from 1 May 2019. There is currently a complete temporary ban on binary options – financial exotic all-or-nothing options in which the payoff is a fixed amount or nothing at all – because they are prone to fraud in their applications, considered a high-risk and unpredictable investment option open to mis-selling by scam or rookie traders.
“Almost a year has passed, and it is surprising to see that the market is growing back to pre-ESMA regulations levels. I think the regulations were well implemented, making it more difficult for brokers dealing with toxic assets to operate without clearly defining what they were selling. As a consequence, many have left the market which is now more stable, healthy and credible” he explained.
“I believe the market will auto-correct itself with some brokers not being able to survive these restrictions and others stepping into the gap to take advantage of that.”

Hedge your bets
So, what advice does Costa Cardoso give to the inexperienced investor who has between €30-50,000 to risk and invest? “First, if you are an inexperienced investor, the best investment is in education and getting knowledge about the markets you want to deal with. After that, in order to start getting a feel of the market, I would suggest using a fraction of that amount and to hedge your investment well and avoid being exposed to high volatility instruments”.

Future trends
Costa Cardoso believes that the world is moving towards a more digital economy and in the 10 years the world is going to be very different from what has been experienced up until now. “User experience will change; new products are going to be introduced and implemented but the pace and way technology is being developed makes it hard to predict” the broker concludes.

Text. Chris Graeme