by Malcolm Curtis | Swisster.ch |December 14, 2009 | 09:18
The Mansour family scores a coup by becoming the first foreign exchange brokerage firm to secure a banking license in Switzerland. The milestone marks the latest accomplishment for the father and two sons from Jordan who started up their company just six years ago in Neuchâtel, where they “didn’t know anybody”, the company’s young CEO tells Swisster.
At the tender age of 28, Jordanian expat Hisham Mansour has become CEO of Switzerland’s first foreign exchange trading firm to receive a banking licence. Neuchatel-based MIG Bank, previously MIG Investments, received the license this week from FINMA, the Swiss Financial Market Supervisory Authority.
The achievement caps a rapid rise for the young executive who founded the firm in 2003 with his father George Mansour, owner of the company, and his brother Wissam, who also helps run the online forex operation. “It’s been the result of hard work,” Hisham Mansour told Swisster.
MIG initially applied for a banking licence in December 2008, he said, several months before a law was introduced to regulate Swiss forex trading firms in April of this year. “It took us more than two and half years to get through this process,” Mansour said.
The family started currency trading in Amman, Jordan before moving to Switzerland six years ago in a bid to attract a larger international clientele. Mansour said the family was attracted to Neuchâtel by the cantonal economic development office, which helped them get established.
As an Internet based company it was not important for MIG to be in Zurich or Geneva, although its offices are midway between the two cities, he said. Coming from Jordan “at the age of 23 it was quite a change, of course, we didn’t know anybody,” he said. The economic development office “helped us integrate and find an office.”
In Jordan, Mansour’s father was trained in pharmacy and became involved in currency trading on a personal basis through the pharmaceutical trade. He dabbled in trading of gold and silver, as well as currency, and taught his sons as teenagers about the business.
The family branched out into Internet trading, then a novelty in their homeland, before moving to Switzerland. When they arrived in the mountain country they found themselves in a crowded market.
Mansour estimated more than 140 firms in Switzerland were offering forex trading services through the Internet before FINMA cracked down with tougher requirements, following complaints from customers. The authority said its aim with the regulations is to protect clients.
Now, Mansour said there are only two other forex brokers, besides MIG, that have applied for a banking licence – Geneva-based companies ACM and Dukascopy. The other companies have either folded, changed operations or moved out of the country, he said.
ACM, which claims to be the largest foreign exchange brokerage in Switzerland, was under investigation earlier this year by Geneva police for suspected financial fraud but no charges were laid. The company has denied wrongdoing, claiming that it was the victim of “a former client bent on malicious intent” who supplied police with forged documents.
The incident occurred just before FINMA brought in the regulations. Previously, forex companies using the Internet had blossomed in an environment without rules.
The changed forex business legislation was prompted by complaints from customers.
In one celebrated case, 1,000 clients reportedly lost their investments through Crown Forex, a company begun in the Jura in 2007 that went bankrupt in May.
Mansour said MIG has survived by gaining more business through word-of-mouth recommendations. “For us our reputation is everything,” he said. Forex trading is a “tight community and in this business, your word is your bond.”
Mansour also touted other attributes of MIG’s business including narrow spreads, lower trading costs and no commissions. He said the company’s service includes a “first-class research department,” a multilingual team working 24 hours a day providing services in 30 languages, plus IT security guarantees.
MIG Bank currently employs around 100 people, all working in Neuchâtel. FINMA’s new requirements call for forex companies to have minimum capital of 10 million francs.
Mansour said MIG raised that amount of capital in 2007 before boosting it this year to 25 million francs. Other requirements include legal and compliance staff and officers to monitor different market risks, plus the Information Technology capacity to provide statistics to FINMA as required, he said.
FINMA spokesman Alain Bichsel declined to say how many foreign exchange brokers have applied for a banking license, although he said there were not many candidates.
“MIG is the first forex dealer to get a banking license but it is not a bank,” said Bichsel told Swisster.
“Under the statutory regulation their business is limited to foreign exchange trading.” However, Mansour told a Zurich press conference last week that the licence allows MIG to diversify into brokerage services in precious metals and “other value-added services.” He said the licence also offers clients the security of knowing they are dealing with an institution governed by Swiss banking laws and he expects the company will attract more customers.
The Mansour family scored another coup when MIG became a sponsor in April 2009 of the Brawn Grand Prix team that went on to claim the 2009 Formula One championship with its winning driver Jenson Button.
The MIG name was affixed to the Brawn’s team’s high-speed motor cars. The team has subsequently been acquired by Mercedes Benz. Mansour said MIG will continue to advertise with the new owner for at least another two years under the terms of the original three-year sponsorship deal.