July 24, 2024
Exclusive Article

An Interview With Exness

Exness is a multi-asset broker who offers access to crypto trading through retail derivative contracts, In an exclusive interview with BitcoinWorld, We bring up how Exness is different from Crypto Trading Platform. 


Can you walk us through the inception of Exness?

Exness was formed in 2008, during the retail brokerage boom, with a mission to redefine the way traders access markets. Since our inception, we have offered a highly scientific approach to liquidity provision, within a highly ethical framework. Our risk appetite, coupled with our willingness to commit capital to clients, has enabled us to create better-than-market trading conditions. Our founder (and current CEO) is an accomplished software engineer who wrote much of the original source code within our tech stack; having such a skillset at the helm of the company laid the foundations for a highly technical and problem-solving DNA, and one which is ever-evolving. We use the word Bold when describing our brand, to emphasize that we are prepared to do things that are more risky for the company in order to have a more beneficial impact for clients. It’s an approach which of course is not problem-free, but it has served us well so far.

What sets Exness apart from other crypto trading platforms?

We are not a crypto exchange, we are a multi-asset broker who offers access to crypto trading through retail derivative contracts. Our business model is highly diversified, which gives our clients  the advantage of trading with a strong and well capitalized company. The crypto winter did not dent our profitability, as clients traded other assets. Counterparty strength is critical in light of the crypto failings of the last 18 months. The strength of our balance sheet means that we have a very large amount of liquidity for clients wanting exposures to crypto. Our order sizes, and in particular the “touch size” quantities for auto-execution, far exceed that available on crypto exchanges. In addition, we provide higher levels of leverage which is appealing for certain traders and strategies. Executing orders with Exness is also anonymous – a trader can completely remove market impact which is a massive problem on crypto exchanges.

Can you elaborate on the ‘Swap-free trading’ feature? How does it benefit traders?

Swap-free was originally a product we offered for the Islamic community in order for clients to be able to maintain adherence to religious beliefs. Once we gained more insights to the product, we decided to extend it to all our clients. We know that a very large proportion of our clients trade during the day and as a consequence we don’t penalize them with fees if they hold overnight positions.

How do you ensure ‘Instant withdrawals’ and how is it different from other platforms?

This is a central proposition for us and we know just how important it is to client trust. Those creating delays at point of withdrawal either have poorly architected, complex systems and/or back offices in remote parts of the world that are just unresponsive or which are validating the authenticity of all transactions before releasing funds – this is like a final safety check for many brokers. At Exness, our checks are done in our tech stack at point of trade, meaning we trust that any downstream transaction is a valid client operation, therefore there is no need for further checking. It’s a clear example of scientific engineering that sets us apart. We apply this logic in other parts of our products too, including payouts to affiliates and IBs.

Can you explain the ‘Stop Out Protection’ and ‘Price Gap Protection’ features in more detail?

When clients trade with leverage, they run the risk of liquidation if the asset they are trading moves against them and they do not have adequate funds on account to keep the position open. Before clients reach zero, we notify them to top up their accounts, but sometimes it happens too quickly before they can make a deposit. At the point of liquidation, the broker closes the client’s positions to prevent further losses. When Exness is faced with this situation, our calculations for liquidation are benchmarked to the midpoint rather than the bid or offer. This has two benefits: firstly, it means that a client has a chance to temporarily go negative and still have orders stay open, potentially moving back into profit, secondly, the benefit is that if the broker widens spreads for purposes of their own risk management, it will never lead to a client liquidation situation. Our goal is to keep our clients’ positions open for as long as possible. As far as gaps and associated protection, gaps are a common and sometimes unpleasant consequence of all markets, created by markets and not brokers. Gaps occur at certain times related to high impact events or illiquid periods. When gaps occur, the prices of assets can differ significantly for a small period of time. Clients who set a stop loss with a specific price (that we refer to as the requested price) that falls between a market gap, can experience large slippage and as a consequence experience a greater loss than they believed they had protected themselves from. In over 90 percent of cases, and depending on the size of the gap, we pass back the client’s requested execution price rather than the market price resulting from the gap. We see this cost as a form of “marketing investment”, because when our clients experience the impact of this, it becomes a talking point and leads to referrals and long-term loyalty.

How do you ensure the security of funds and financial data for your users?

Our client funds are segregated from company funds and these funds reside with big global tier 1 banks, in tier 1 jurisdictions. We also ensure that we always have at least 10-15 percent headroom on top of all client funds, so that we can fulfill all withdrawal requests at all times. We monitor this daily and in fact, our auditors also validate this procedure. Furthermore, we have multiple banks and our funds are split across them to create resilience from any bank failure. Unlike some institutions, we don’t invest clients’ funds to try and earn a yield, we have assets in standard bank accounts, always fully accessible to us. As far as security of data, we have an entire department dedicated to the protection and safety of all company assets and client data; it is an area we take very seriously.

What are the advantages of trading crypto derivatives over actual cryptocurrencies?

Liquidity and market impact are the main advantages, it can take weeks to execute a large block of spot BTC on a crypto exchange where liquidity is in fractions on Bitcoin. Indeed, a 200 Bitcoin purchase on a crypto exchange can create a 10% impact on price. Trading with Exness’ private liquidity removes market impact and improves both speed and execution size. It’s possible to trade and gain much larger exposure to crypto much faster than on a typical crypto exchange. At an operational level, since the derivatives are exposed to the asset, there is no requirement to own the actual crypto and all the security concerns associated with that as well as wallet management, etc. Clients get the same financial exposure without the same risks. On the other hand, if a client wants exposure to the asset for the long term, as part of a household income diversifying measure, then it’s better to hold the actual asset securely in a cold wallet.

Given the volatility of the crypto market, how does Exness provide support for its traders?

We don’t treat crypto any differently to the way we trade other assets. We price it competitively, provide leverage, and give clients stop protection and gap protection. In more volatile assets, we can expect more liquidations if clients trade with large amounts of leverage, so we caution clients to trade sensibly.

How do you manage the floating spreads and ensure fairness for traders?

Exness competes on spreads, so it’s always our goal to keep spreads tight and stable. Clients demand the best from brokers today and they have a lot of choice, so we always ensure we remain competitive. There are occasions when, for our own risk management, we may need to widen spreads or reduce liquidity, but it’s an exception rather than a rule, and with more than half a million active traders, if we were to have sub-standard pricing, we would feel the pain and complaints immediately. Pricing can be misleading, brokers may display very tight spreads to attract business but then on large orders fail to fulfill the execution or reject the order – Exness has very large inventories of liquidity so we can always sustain very large orders with tight spreads.

Are there plans to introduce more cryptocurrencies or other financial products on the Exness platform?

We are always looking at demand and when we see the opportunity, we add products. We also remove products if it’s prudent to do so; the Russian ruble is a recent example, as well as a few cryptos which were subject to scrutiny from the US SEC. In the near future, we plan to introduce more metals for trading.

What have been some of the major challenges in building and scaling Exness?

First and foremost, scaling creates a large technical challenge, so we have made massive and global infrastructure investments to ensure we don’t have bottlenecks with the rapid surge of new clients. The goal is always to avoid visible impacts to clients in both trading and payments. Processes like weekend maintenance work, report running or data analysis, all become far more complex and time consuming, which leads to large increases in staff numbers. Maintaining service levels whilst scaling is also a great challenge – automation of processes is critical, otherwise costs become too high.

How do you view the current state of the crypto market, and where do you see the biggest opportunities?

The Crypto market is still in early formation stages and like any new industry it’s dealing with bad actors, FTX being the most notable. Whilst these early stage industry failures have massive negative impact for those involved, it strengthens and educates the industry and this is the stage of crypto we are experiencing. The big news now is the institutional acceptance of crypto, which was signified by Blackrock and Fidelity filing for a Bitcoin spot ETF, and at the same time the launch of EDX crypto platform by massive liquidity market makers like Virtu and Citadel. These institutional pillars strengthen the retail proposition as well and move the industry forward. However, it remains to be seen how the crypto industry will deal with the influx of large scale buying and selling, as the liquidity is extremely limited compared to FX or equities. Large blocks of Bitcoin will be hard to execute without massive market impact and the fact that BTC has fixed supply will also contribute to these problems. Liquidity aggregation in markets will be a massive area of innovation in the years ahead as it has been in FX and equities. Regulators have been proactive in some jurisdictions to get on the front foot as they see the competitive benefits. Dubai and Hong Kong are good examples, as is MiCA in Europe.

How do you ensure Exness’s brand image remains strong and trustworthy in a market that’s often viewed with skepticism?

We stick to our principles and we let our clients do the talking. Like every industry, the retail trading industry has had its fair share of scammers and they have left a stain on the big credible brokers, but with over two decades of operation, the industry has consolidated and those standing strong and reliable for their clients go from strength to strength in the knowledge that their reputation is everything.

What advice would you give to someone just starting out in crypto trading?

Enter with eyes wide open, understand volatility swings in the major assets like BTC and ETH, and build expectations of losses around that. Be aware of excessive leverage and the likelihood of liquidation. Meme cryptos can have exceptional gains but so many just fail, so if tempted to invest in them, do the research and understand what is the purpose of the coin in the business model. Where possible, store crypto in cold wallets and make sure to keep your private key exceptionally safe – if you forget it, it’s gone.

Can you tell us more about Exness’s social responsibility initiatives?

Exness has created an in-house Community department, with an elaborate CSR agenda at its core. Initiatives are centered on three pillars – environment, education and emergency – and the agenda is a global one, starting with activities in Cyprus where we are headquartered and extending to key markets including Asia and Africa.

In Cyprus, Exness donated 1 million euro to the public health sector during the pandemic, for multiple necessities including ventilators and diagnostic equipment. In the past two years, we have also collaborated with the Cyprus department of Forestry, investing in surveillance systems for the early detection of wildfires as well as firetrucks and reforestation plans. We work with marine conservation NGOs and wildlife education providers to raise awareness on biodiversity, and are in the process of measuring our carbon footprint and setting mitigation and offset targets.

Last but not least, we have the Exness Fintech Scholarships Program, which has so far awarded talented graduates in STEM fields from Cyprus, South Africa and Vietnam, with life-changing scholarships to attend Cambridge University, the University of Cape Town, and Hanoi University of Science and Technology, respectively. We aim to expand this program to even more countries in the next year, positively impacting the lives and education of future generations.

Any exciting future updates or features that users can look forward to?

We plan to add more metals products, specifically zinc and copper in the coming months. We will be extending more information in our Personal Area platform around the trading advantages we offer; on the platform we have integrated trading signals from Trading Central into our charts and activated a host of new indicators based on tick volumes. We have a brand new order placement form with a built-in calculator and Bulk Order Modification functionality. In the future, we will likely do more work on charting, including embedding indicators when a high margin requirement applies.

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