Freedom Holding CEO and founder, Timur Turlov took the decision to start the company after the investment bank he worked for in 2008 shut down its branches due to the financial crisis.
In an interview with Forbes Cyprus, Turlov talks about the company’s operations in Cyprus, its competitive advantages from competitors, new expansion plans, and how it has faced recent economic and geopolitical challenges.
Can you give us a summary of Freedom Finance’s operations?
I think we are one of the most technically advanced brokerage firms in the region. We are one of the largest digital ecosystems in Central Asia and one of the fastest-growing organisations in Cyprus and Europe, catering to over 250,000 clients across the European Union.
We have over 300 employees in Cyprus, working for Freedom24, our European Brokerage Company. The development of our proprietary trading platform (Tradernet, branded Freedom24 in the EU), is done in Limassol and is our flagship product that allows us to connect directly to any stock exchange around the world.
Freedom Holding Corp. (#FRHC) is listed on the American stock exchange Nasdaq and regulated by the US Securities and Exchange Commission (SEC). We have a subsidiary in the United States, which is a broker-dealer, and we have investment banking licenses in the USA and full licenses in Europe to offer our clients the ability to buy any stocks, bonds or other products on many European and American stock exchanges. We also help clients from Central Asia to access European and American markets.
We are one of the few organisations with our platform and multi-exchange access across the European Union and with our integrated solutions for our clients. This helps us to implement an effective marketing strategy as well.
What led you to create the company while you were still a student?
We established the company towards the end of 2008 when the global financial crisis hit and the investment bank I was working for decided to close its branches. I was laid off and had no other option but to start my own company to serve clients who still wanted to trade in American markets. And that’s how we got our first client in November 2008. It has been a very long and difficult road since then.
Imagine the difference between being a small startup and not being part of a reputable bank. How difficult it was to grow in the middle of the financial crisis and build relationships of trust with partners and clients.
It was a difficult time for everyone, but it was also very exciting. I felt responsible towards my team, my family and our clients — to keep doing my job. And I think that every time you don’t give up, in the end, you survive, and most of the time people will follow you. And I didn’t want to give up.
On the other hand, it was very exciting to create excellent services and products and build something. And the feeling that I was providing something valuable was what kept me going, even in the toughest moments, back then, 15 years ago, when we went through many different crises.
It has been a tough journey, but also very interesting. Never did I dream of becoming an entrepreneur, but it has been a fascinating trip, and of course, it has many advantages. It’s exciting to explore and create something new every day. That’s what gives me the impetus to overcome the difficulties.
In which countries is Freedom Holding present? Do you have any further expansion plans?
We are present in Kazakhstan, Ukraine, Uzbekistan, Kurdistan and most European countries, and we also have a presence in the United States. We have representative offices in over 10 European countries, including Greece, Germany, Poland and Spain.
These are very different countries, yet we try to serve our clients across Europe. We have large offices in many countries, and at the same time we manage to keep our operational costs low, so there is a lot of room for further development in Europe.
We see a big opportunity in the emerging markets of Central Asia, which have a high GDP growth rate. For instance, Kazakhstan’s GDP grew by almost 6% last year, while Armenia’s grew by over 10%.
There are many opportunities in these emerging markets and we believe we can be an effective gateway between Europe, Central Asia and the United States, offering access to products.
I hope we will be able to develop further in the United States, where we could become more competitive. This is something we are considering for the next two years.
At the same time, we remain interested in growing in Europe, possibly through the acquisition of banks in the European Union area, to gain access to the Turkish market.
How far would you say that you come since then?
I never imagined we could come so far. Our main aim was to build a company that would be among the top 20 in our country. But in Kazakhstan, we have built a large ecosystem serving over 5 million clients.
We have become the leader in the region, possibly the largest brokerage firm in Cyprus and surely the largest stockbroker.
I never dreamed of becoming an entrepreneur, but despite the many obligations, it is very interesting to be one, and this is what gives me the impetus to face all the difficulties.
What sets you apart from your competitors?
We have learned a lot from our competitors and we don’t dramatically differ from the best of them. However, our main advantage is our trading platform, which allows connection to multiple stock exchanges through a single system.
Very few platforms offer this possibility. We can connect to most European exchanges, as well as those in Central Asia and China. Among other things, through the application we offer banking services, issuing debit and credit cards to our clients.
I believe every platform has its own advantages and I know some competitors offer better products than us. However, we also have some products that are better than those of our competitors and we bring them faster to the market. I believe that over time we will become even more competitive and better in what we do.
Our marketing approach focuses on technology, and one element that sets us apart is our low infrastructure cost. We have done extensive research and analysis on many stocks, and in this way, we can offer our clients services and interesting ideas for their investments.
What made you set up operations in Cyprus?
We came to Cyprus many years ago, attracted by the favourable tax regime and the low cost of setting up a business.
The tax regime was quite attractive, the cost of setting up was low and the migration regime was also attractive for approaching foreign specialists and hiring employees.
Now, I believe Cyprus is an excellent destination for our employees and a very attractive destination for us as well. It has a relatively low cost of living compared to other European countries and a beautiful natural environment. Operational costs are also low compared to the European average.
Moreover, the banking system was very open for some time, although it has become stricter now. Cypriot banks were very open to working with us. Even though regulations have become stricter, the financial services market has been fully aligned with European regulations.
How did recent economic and geopolitical challenges affect your business?
When the war in Ukraine started, we decided to stop our business activities in Russia. We have now fully divested our Russian assets. We moved some clients to our branches in other countries, while we started focusing more on Kazakhstan, where we are the largest investment and insurance group and have a fast-growing digital bank, which launched in 2020.
This was a big challenge for us, but we managed it well. We went through extensive audits by the Public Company Accounting Oversight Board (PCAOB). The audits of the Securities and Exchange Commission and Cyprus Securities and Exchange Commission were very extensive.
Over 100 employees of Deloitte and other auditors spent months in our headquarters and branches, and the involvement of compliance teams of experts was required to examine our operations in terms of anti-money laundering (AML).
We had to comply with strict regulations, as the countries where we operate are high-risk ones. Kazakhstan is Russia’s neighbour and has many business interests in Russia. However, we successfully passed these procedures, strengthened our control mechanisms and also complied with the sanctions in a very careful manner.
Again, we proved that we are the most transparent organisation working with any regulatory body.
How would you evaluate Cyprus regarding digital transformation?
I think Cyprus has a great opportunity, given its relatively small size. When you have a very large economy, it’s very difficult to agree on certain points, but in a small country like Cyprus, this could be an opportunity to implement new technologies faster.
I believe Cyprus could integrate new technologies faster than other countries and become a pioneer in this field. For example, it could implement existing technologies faster than the United States and Europe.
How would you describe your leadership style?
I prefer to trust my team. I prefer to encourage my team rather than control it. I’m certainly not the best manager.
I think I can inspire my team, show them a vision, get them to take responsibility and give them a certain amount of trust. I can communicate my vision to the team, inspire them and keep their motivation at a very high level by showing them some interesting examples.
I am not an expert in compliance and regulations, there are other people in our accounting department and finance department that are better than me.
