Tadeusz Kuropatwinski, general manager of X-Trade Brokers Romania (XTB), says that education is one of the main factors that will help Romanians gain trust in the financial market, which has been rocked in the past two decades by some high-profile frauds, and sustain the development of the Bucharest Stock Exchange. He outlined to BR the steps that will turn the BSE into a regional contender, similar to the Warsaw Stock Exchange.
XTB came to Romania in 2009. How much have you invested locally since then and what are your plans for the future?
We started with an initial investment of EUR 3 million and we spend around EUR 1 million a year on education and marketing tools, promoting and running operations here. But for us, the main focus is on education. This is part of our organization’s DNA; this is our vision, and it’s one of our core values. Apart from this, we invest in technology and customer service and these are the directions in which we are going.
We have 15 people locally, who work in the research, marketing, brokerage and customer care departments. Around the world we have over 500 people.
Are Romanians willing to learn?
Yes. You can make money, but you have to learn. And this is what we ask them first – if they want to learn. The majority of them do and they are glad to do it because it’s for free. We are always hosting full rooms for these educational projects.
There are some Romanians that have great knowledge on a really world-class level. It’s a tiny fraction, a very small percentage, and we involve them in our educational program. At least once or twice in the history of our XTB Academy, someone who was a participant also became a speaker at our seminars.
We obviously want more customers, like every business, but we believe that we can only get them by being transparent and fair with them, educating them. Some of them become customers, some after a time, after two years for instance. We don’t push them to do this, because we do here only execution business, meaning that customers are responsible for the decision; we deploy the tools to do it. You need to learn a lot to be successful. We give them different stationary programs like XTB Academy and webinars. We do not force the participants at our seminars to become our customers.
What can you tell me about the size of accounts and deposits of clients in Romania?
If you look generally at deposits in Romanian society and in Europe, this is obviously reflected in our deposits and trading volumes. The amounts aren’t comparable with Germany, Spain or even Poland. Usually a customer that is really active deposits over RON 10,000 to RON 50,000. A lot of customers start their adventure by depositing RON 1,000. You can start trading even with RON 100. We advise clients to start with small amounts and see what like it’s to lose or win money on financial markets. This is basically the biggest wall that you have to jump over: yourself and your psychology in trading. There are also customers that know what they want; there are good traders that bring RON 50,000 or RON 200,000. What we look at is long-term business and also to build the market and educate customers.
Are Romanians risk takers?
They are pretty much the same as Spanish people. They have increased their risk appetite a bit, but on the other hand there is this notion in Romania that you can get money without taking risks. It’s not possible at all, because even if you put money in a bank account it’s at risk. Romanian people are similar to those in other countries. They’re oriented towards business; they would like to make money. A lot of them are getting into trading, because they have understood the mechanism and are willing to take risks.
Do Romanians have any favorite financial products?
It’s pretty much similar to other countries. For example, the major currency pair, which is the Euro versus the American Dollar, is the most liquid and the majority of people are trading EUR-USD. The percentage is from 50 to 80 percent, depending on whether something is happening on other currency pairs. Then we have major currency pairs like the British Pound versus the Dollar. We’re seeing more interest in commodities, most recently gold. People find commodities easy to understand. From equity or shares, big companies like Apple and BMW are popular – people know the brands and go on to invest in them.
Do you think Romanians are interested in locally listed companies?
When you look at the Bucharest Stock Exchange, you see great unused potential, because the country has a lot of good companies like Petrom and FP. These are big assets, but as you see, the liquidity is low. Basically, even if you are interested and buy one of these assets, and you want to sell it back, there might not be buyers on the other side. It’s difficult for you to cash in and exit investments. If you look at the statistics, we have about 4,000 investors active on the BSE; it’s not promising in this way. But if you take the glass-half-full approach to life, more than 150,000 people have income of over EUR 1,000 in Romania. We have 5 million taxpayers so you can see there is potential for the country. There are things that have to be done both on the brokerage houses’ side and by the regulatory bodies.
There has to be a common vision of the market and common efforts to boost it, but there is certainly potential. Unless more companies are listed and there is more education, so people understand the financial markets, they will not come; the market will not improve if they don’t come because investors provide liquidity. It needs effort from both sides. Educating customers and getting new companies on the BSE – this is the direction in which the market should go and the leaders should take. Privatizations will help the market and bring in new people.
What should Romania learn from the Polish Stock Exchange?
There are two elements. First of all, the BSE started a bit later. Secondly, Romania has had a harsh history on the financial markets with Caritas and FNI, and this really created distrust. Even recently, we had the case of Sima (e.n. Cristian Sima, a stock exchange investor and former head of the Sibiu Stock Exchange, who absconded last year). Although these things happen everywhere, on other markets, you can say people here are slightly distrustful. The only way to make massive improvements is through education. We have huge savings in Romania; people save a lot. Moving this money from savings accounts to the capital markets would mean significant improvements.
Looking at Poland, I think Romania might be similar. We need a long-term vision. In ten years, if Romania has a good vision and follows the path, we could really experience miracles here.
How can Romania tackle the issue of companies promising large gains in forex?
These kinds of companies are here. They recently started popping up in Poland. In Romania, the level is extensive – I haven’t seen this level anywhere. How to deal with them? We say education. We are not in a position to point the finger. I see our role to create best practices and to run our business with high integrity and transparency, being regulated, offering good services and at a good cost. This is what business is for me. It is not for me to say what should be done. You have to be sharp, create best practices and codes of conduct, for the market. It’s about how you inform your customers, how to advertise. But then, we have to go inside and see how companies are run, what’s happening behind the scenes. And then allow only companies that are regulated, basically. We are getting into this kind of absurd situation when we are not regulating something because it’s not been submitted to us.
Everybody that wants to offer products on this market and sell them has to do it with certain ethics. Now, we have plenty of so-called SRL brokers. They are popping up, changing clients, moving locations. The scale of these is really big. Basically, for us it’s more difficult to run the business because of such companies, as we have to explain the difference between a broker and someone that wants to scam you. It takes more time because of this, but with education things can improve.
Is the setting up of the Financial Supervision Authority (FSA) good news for the market?
Looking from outside, the consolidation of the regulatory bodies is good. In Poland, this happened a couple of years ago and it was a very good move. I’m keeping my fingers crossed that this regulatory body will do a good job on the Romanian market. I’m positive this will be good for Romania.
When did you come to Romania?
I came in the middle of 2010 – it will be three years soon for me – and my wife moved here after two years. It’s much easier to be here because my whole family is here. I think there are still a lot of things to do in Romania, but we like it – it has been a good experience and I’m sure it will last for some time.
Have you been on vacation locally?
I am a big fan of snowboarding in Sinaia or Poiana Brasov. First I went to Vama Veche, and I have a dog from there. We found a little puppy that we took home because it was sick, so I have a connection with Vama Veche this way. I’ve been to Mamaia and Constanta for kite surfing. Nature in Romania is extremely beautiful, something that you can’t find in Germany. In all Western European countries right now it is asphalt and concrete. You drive on highways that are impersonal. Here you have beautiful nature; some places are really untouched by humanity. My peers and friends that came here from Poland and other countries and had to leave, once they have sent their boxes home, they’ve started crying sometimes because it’s such a great place.
Romania has got different faces. There are expensive cars and fancy clubs, but you also have some alternative culture, so it’s lovely. The Centrul Vechi is amazing. This outgoing culture and openness is something incredible.