76.1% losses! It’s a rousing call, shocking complacency and inertia into action. This appalling figure came to light when the shifting sands of the European Union’s financial markets moved quickly to adhere to ESMA’s mandate to all EU brokers to report data on trader success and failure. ESMA is an independent European Union Authority that contributes to safeguarding the stability of the European Union’s financial system.
EU brokerages rushed to adhere to this new standard of transparency and reported their data, which resulted in this study by The Finance Magnates Intelligence Department on 30 European Union Brokers and their Profitable and Not Profitable percentages. The figures are shocking:
The study added that two of the top five brokers are home to the largest number of winning clients that offer copy trading product, but overall 70% to 80% losses seemed to be the norm. A further inquiry disclosed that brokers with higher percentages of losses did not adequately equip their clients with data, tools, insights or knowledge to make informed decisions.
This implies that brokers have been aggressively advertising and selling their products, while neglecting to be fully transparent about the real risks and facts about the product. EMSA’s new mandate now forces misleading advertising out of the picture and brokers who are serious about growing their business for the long term will be ruminating on new tactics that will truly benefit their clients.
The industry-changing exposé divulges and confirms suspicion of the global investment industry’s lack of transparency, accountability, propensity for errors and inefficiencies. While this new regulation will help reshape the narrative and risk profiles to some extent, the timeworn systems in the traditional investment landscape still needs a thorough redevelopment. This pivotal stage may take several more years of regulatory assessment and analysis before appropriate policies can be designed and implemented.
That being said, a small percentage of adept brokers who can genuinely deliver efficient trading by employing leverage and margins still exist. However, they are outnumbered by the questionable brokers who leave investors and their funds prone to high risk, exorbitant transaction fees, withdrawal delays, market manipulations, brokers trading against clients or exchange hacks. These gaps and shortfalls have yet to be addressed through measures by central authorities around the world. Leaving the global investment landscape riddled with trust and transparency issues that inhibits its full growth and potential.
Nobel Prize-winning economist Kenneth Arrow stated in 1972, “Virtually every commercial transaction has within itself an element of trust, certainly any transaction conducted over a period of time. It can be plausibly argued that much of the economic backwardness in the world can be explained by the lack of mutual confidence.”
What then can investment companies and individual investors do to navigate and excel in this fledging age of transparency that demands for trust as the basis of all transactions? The Ethereum Blockchain is the perfect place to play by these new rules. The technology allows any participant to place trust in their transactions, even in the absence of a central authority, because all transactions are executed by unbiased, self enforcing mini programs called ‘smart contracts’ that ensure all transactions are carried out in a tamper proof and transparent manner.
Ethereum-based blockchain platforms like Level01 are built to answer the need for transparency and trust. The remarkably well-designed Derivatives Exchange employs smart contracts and powerful Blockchain technology for automated Peer to Peer (P2P) trade settlements. Its groundbreaking technology enables investors to trade options contracts directly with one another, without requiring an intermediary or broker. Built with logical measures that effectively resolves trust and non-performance issues, Level01 enable investors to circumvent the risks and difficulties of a centralized brokerage.
A platform where people feel secure in dealing with other people is a recipe for success. The key is in the technology that fulfills expectations that deadlines, agreements and contracts will be kept. Conversely, if there is enough credible and transparent investment data in place, people are more likely to take on a risk or a trade. Level01 removed all possibility of data manipulation by forming a partnership with a 100-year-old global intelligence company, Thomson Reuters. Level01 utilizes Thomson Reuters data feed as a trusted source for its AI deep learning algorithms to provide real-time pricing analytics on derivative contracts; the data is also used to ensure transparent, timely and accurate settlement of derivative contracts upon contract maturity.
How it works is simple: first traders issue their options contract (C) in the Level01 Derivatives Exchange, they are then given a list of fairly priced trade matches through Level01’s powerful Fairsense AI analytics. Once a trade match is established, traders authorize their wallets (W) to send Level01’s native LVX tokens (T) to the smart contract (SC). The smart contract (SC) then streams live data from the system’s oracle (O) to determine the winning party upon the option contract maturity. The smart contract (SC) then automatically distributes profits to the winning trader and platform wallet (PW) fees. See diagram below.
With transparency and trust out of the picture, investors can operate at a level and unbiased playing field with access to credible and unalterable data to make well-informed investment decisions. Smart contracts and trade settlements are handled automatically so trade can happen at an unparalleled speed. It becomes a game where anyone who has conducted reasonable research and analysis of the data, can work on multiplying their investment returns anytime, anywhere in the world. Investors have full control over their own funds and deposits or withdrawals can be done instantly.
On top of everything, Level01’s native LVX token is primed to be the world’s Universal Asset Currency because of its growing global liquidity, circulation size and representation of value. The derivatives market is worth a whopping $1.2 quadrillion which encompasses all types of investment assets. This mind-boggling figure alone is a strong proposition for investors of all sizes to take advantage of an intelligent and trustworthy derivatives exchange that has the right elements needed to fuel and optimize the global derivatives market.
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