Michael Geiger: One of the biggest challenges facing the brokerage industry today is the presence of unethical actors

Stricter oversight ensures that the industry remains transparent and accountable, which in turn, builds trust with investors, according to Libertex CEO Michael Geiger.

Geiger talks about the changing regulatory environment that investment firms have been called to adapt to, and the importance of these frameworks in safeguarding companies and investors, in an interview with GOLD.

The EU’s recent regulatory blitz to protect retail investors has kept everyone on their toes. Which recent regulation has been the biggest help to the industry and which one made you feel like squeezing a stress ball?

In the rapidly evolving landscape of financial services, particularly in the EU, regulatory changes have played a pivotal role in shaping how companies operate, especially when it comes to protecting investors. Although these regulatory restrictions are becoming more rigorous, we view these developments as positive steps towards a more robust and secure market. Stricter oversight ensures that the industry remains transparent and accountable, which, in turn, builds trust with investors. We see this as an opportunity rather than a challenge, as it reinforces our commitment to safeguarding our clients’ interests and strengthens the foundation for long-term growth and stability in the industry.

One beneficial regulation introduced in February 2024 is the “Markets in Crypto-Assets” (MiCA). This essentially comprehensive framework regulates crypto-assets and related services that were not regulated by existing financial services legislation. With this framework in place, companies like ours can operate more confidently in the crypto space, fostering trust with clients through enhanced transparency and security. Key provisions include requirements for transparency, disclosure, authorisation and supervision of transactions, all of which are crucial for ensuring a secure and trustworthy environment for crypto-related activities. To ensure compliance and full collaboration with authorities, firms must obtain authorisation to operate within the EU.

This includes requiring firms that issue and trade crypto-assets to be licensed by a national regulator, allowing them to provide services to customers across the 27-member country bloc. Once authorised, firms can offer crypto-asset services similar to those already approved under Directive 2014/65/EU (MiFID II). This regulatory clarity allows firms like ours to align with both local and EU-wide compliance standards, offering clients the confidence that we adhere to stringent legal frameworks while delivering innovative services. In essence, MiCA not only strengthens our operational capabilities but also bolsters investor protection, ensuring that we continue to build a strong foundation for long-term stability and growth in the financial services industry.

With 253 CIFs now on CySEC’s books, Cyprus is looking like the EU’s CFD broker capital. How would you assess the local market’s growth and what more can be done to attract more firms to Cyprus?

The remarkable expansion of the local market in Cyprus is indeed impressive, solidifying the country’s position as a key hub for online brokers within the EU. The market is not only well-established but continues to grow steadily, attesting to the regulatory stability and the conducive business environment. This growth brings the added benefit of a larger talent pool, making it easier for companies to find experienced professionals locally.To further enhance Cyprus’ attractiveness for prospective investors and companies to establish their regional headquarters on the island, a reduction in the corporate income tax rate could be beneficial. Furthermore, streamlining regulatory processes, including fast-tracking licensing procedures for new firms, would make the setup process more efficient. In addition, strengthening partnerships between educational institutions and the financial sector to nurture a highly skilled workforce could ensure a continuous supply of top talent.

Every industry has its roadblocks but what would you say are the biggest challenges ahead for the industry?

One of the biggest challenges facing the industry today and in the near future is the presence of unethical actors, particularly amongst non-regulated entities. Their questionable practices can often cast a shadow over legitimate, regulated companies, damaging their image in the process. This poses a concern for well-regulated businesses, as it can erode the trust and goodwill that these companies work diligently to earn from their clients. However, we don’t see regulation itself as a barrier to growth. In fact, we welcome regulatory frameworks that protect clients’ interests, as they strengthen the overall integrity of the industry. Regulatory requirements motivate us to be more innovative, pushing us to develop creative solutions that not only meet compliance and ethical standards but also enhance the client experience. In the current fast-paced environment, this drive for innovation helps us remain competitive and continue delivering high-quality, trustworthy services.

Technological trends come and go but which upcoming tech do you think will truly be a game-changer for brokers and how?

Without a doubt, artificial intelligence (AI) stands out as a true game-changer for brokers. AI has the potential to revolutionise the industry by automating processes, enhancing data analysis and providing more personalised services for clients. From streamlining customer support with AI-powered chatbots to leveraging machine learning for more accurate market predictions, this technology can significantly improve efficiency and decision-making. Moreover, AI-driven tools can help brokers better understand their clients’ behaviours and preferences, allowing for more tailored investment strategies and improved risk management. As AI continues to advance, its integration into brokerage platforms will undoubtedly reshape the way firms operate, offering a more dynamic and responsive service experience for clients.

(This article was first published in the October issue of GOLD magazine. To view it click here)