Looks like we have a new playa on the block who goes by the name of Playtech. What does this gaming giant have up its sleeve and what business does it have entering the forex industry?
First up, here’s a little background info on Playtech.
Playtech is a gaming corporation that specializes in developing software for online gaming. It’s actually listed on the London Stock Exchange and valued at over 500 million GBP. Playtech’s most popular software product is its online poker platform, iPoker. (I’m guessing the developer was an Apple fan boy.)
What’s interesting though is that Playtech management decided to expand its horizons and enter the forex industry. This past February, Playtech showcased a bare-bones version of a binary options trading platform at the ICE gaming exhibition in London.
Playtech believes that with its resources at hand, it has great synergy to learn and adapt itself quickly to the forex industry. Take note that it recently acquired Geneity, a sports betting software developer that has already developed risk management systems. Since binary options trading (which I’ve discussed in the past) deals mostly with odds and probability, it thinks that it can implement these systems easily into the forex landscape.
As a gaming company, it is arguably new to the forex industry. What this could mean is that it might not be as well-versed as other companies, and its services may end up being sub par to other experienced service providers for the foreseeable future. Learning the ins and outs of the industry may take some time.
Another issue with Playtech is that it is originally a gambling company, which could reinforce the belief of some that trading is gambling. While some people are fine with gambling, there are some who are heavily against it. This could prevent potential clients from signing up with Playtech.
New Industry Trend?
Let’s be clear here: Playtech is NOT a broker and WILL NOT become one. The company simply does not have enough capital to be a market maker and provide liquidity.
Instead, it will white label its services to existing brokers. To put it simply, white labeling is the practice of one firm buying another firm’s product and then marketing it as its own. For example, a meat packer sells his goods to Supermarket A where his meat products will then be rebranded under the Supermarket A’s label.
In the forex market, white labeling is used for trading software, platforms, and other additional services that brokers may offer.
This is just another step in the evolution of the retail forex trading industry, where more companies are starting to white label their services. Hopefully, the increased competition will lead to more focused and developed products that cater to the end-users needs, increased account security, and a better return-on-risk payout.