The richest and most successful Australian you’ve never heard of makes money from foreign exchange and cryptocurrency trading, lives in a luxury Cyprus marina and recently got a whopping $906m dividend payment.
Meet the little-known forex and contract-for-difference broker who got paid more than billionaires like Gina Rinehart and Kerry Stokes, and posted bigger profits that companies such as Atlassian, Nine Entertainment and Crown Resorts
IC Markets founder Andrew Budzinski is the 46-year-old head of what claims to be the world’s largest forex broker operating in 200 countries and is quickly working his way up the billionaire ranks of The List – Australia’s Richest 250.
Budzinski’s privately-held company has racked up almost $1bn in net profits in three years, making money from its clients trading in the risky financial derivatives known as CFDs, taking positions on currency movements and other commodities, stocks, indices, bonds, and cryptocurrency instruments.
After working in stockbroking and then for CFD providers, Budzinski formed IC Markets in 2007 and has its headquarters in Sydney, though Budzinski now lives in a luxury marina on the southern coast of Cyprus.
IC Markets has been a ubiquitous presence during cricket’s Ashes series this summer, albeit as a sponsor of England’s ill-fated team, and has recently clinched commercial partnership deals with a string of soccer clubs in Spain and Germany.
Similar to online gaming or gambling, IC Markets’ fortunes have surged, Budzinski says, with much of the world – including Australia – stuck at home over the past two years.
“Lockdowns and Covid market volatility fuelled the global trend towards self directed trading,” Budzinski tells The Weekend Australian.
“Australia has always been an important market and continues to be a strong market. Australians are now trading more cryptocurrencies and stocks more than ever. We have seen a significant uptick in cryptocurrency and stock trading as customers seek returns from alternative asset classes and take advantage of strong global stock markets.”
IC Markets claimed a record volume of trading on its platforms late last year, saying more than $1 trillion was traded by its clients in November and a total of $9.32 trillion for 2021.
It said its performance was boosted by product diversification, growth into new markets, an increased client retention rate and optimum trading conditions which led to clients taking advantage of high volatility in the markets.
“The real ‘boom’ occurred in the UK, which remains the main market for IC Markets looking at search interests,” says Justin Grossbard of Australian trading comparison site Compare Forex Brokers when describing the number of people looking for a forex brand or related items online.
“In 2021 they received over four times the interest from that location and Covid saw UK CFD popularity increase by a massive 137 per cent.”
Yet Budzinski’s company operates in a sector not without controversy.
IC Markets is a big player in a part of the market that attracted the attention of the Australian Securities and Investments Commission last year, which cracked down on the sector and sent the profits of many rival companies plunging.
Pepperstone, a forex pioneer co-founded by another member of The List in Owen Kerr, saw its trading revenue and profits halve in the year to June 2021 after ASIC imposed conditions on the issue and distribution of CFDs to retail clients, including trading of currencies, stockmarket indexes, shares and crypto assets.
After three reviews in four years, ASIC moved to limit the extent to which brokers pumped up the bets their clients were making on financial markets using CFD products. Previously retail clients were allowed to leverage, or magnify the value of a trade, by up to 500 times their investment on some products — far above the rate allowed in Europe and other countries.
ASIC said it had been extremely difficult for retail traders, many of whom are young and attracted to the excitement of trading online, to make money from the activity.
“For example, during a volatile five-week period in March and April 2020, the retail clients of a sample of 13 CFD issuers made a net loss of more than $774m,” ASIC said.
Grossbard says that ASIC made the changes, retail traders have moved away from conventional trading and moved to algorithmic trading or social trading.
“Interest in copy-trading (copying the position taken by another trader) on crypto has also increased by 75 per cent over the past year, showing that individuals are looking for alternative trading options now that leverage is limited.”
Forex traders like IC Markets have pushed into new markets in recent years, some of which like Vietnam have retail investors keen to trade even though trading activities are officially banned.
IC Markets also ran into issues in Italy where it became embroiled in a legal dispute with soccer club Inter Milan, which dumped it as a sponsor. The Italian financial regulator had blocked IC Markets from operating in the country.
Yet IC Markets made a $421m net profit for 2020, according to documents recently lodged with the corporate regulator, though it remains to be seen whether it can keep up the run of spectacular results after the ASIC crackdown.
Budzinski says the regulation change “is likely to affect our product offering. It has already affected foreign exchange trading and may extend to cryptocurrency trading,” though he noted that the decreased appetite for leveraged trading had resulted in an increase in cryptocurrency trading volumes.
Such is its money-making success though that IC Markets has quickly emerged as one of Australia’s biggest corporate taxpayers.
According to Australian Taxation Office figures for the 2020 financial year, the most recent available data, IC Markets’ parent company International Capital Markets, paid $185m in tax – more than big name entities such as South32, McDonalds Australia, Tabcorp and JB Hi-Fi.
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