This page contains a Flash digital edition of a book.
RETAIL e-FX CLIENT >>>
traders complain about are stop hunting and spread
widening.”
Richards adds stop hunting is the practice of a MM
moving the price to hit a large number of protective
stop orders, even if the price may not have reached
that level through competitive pricing. In this scenario
the MM pushes the price up or down by a few pips
momentarily with the intent of stopping out traders
and booking profits for the dealer. Spread widening is
the practice of artificially widening the bid/ask spread
when accounts are in a profit, to eliminate said profit
or even forcing accounts to incur a loss due to margin
issues, says Richards.
Ditlove says MBTrading holds its liquidity providers
to fairly specific terms that if they are showing a price,
they have to execute a certain amount at that price. He
adds that obviously, there are scenarios such as news Jesse Richards
releases where more orders are being fired at them “The two most common forms of manipulation traders
complain about are stop hunting and spread widening.”and they also want to execute less. But compared to
years ago when a deal desk could slip a customer 100
pips because of the non-farm payroll data releasing,
things have come a long way, he claims, adding: “Does
“Now, it should be noted that while banks, primeevery fill occur on the visible bid and ask at the time
brokers and large institutional traders may operate onyou click the button? Probably not under fast market
a settlement basis utilising a true ECN environment,conditions, which is no different then an NYSE
most retail forex ECN style accounts still operate onspecialist who is charged with maintaining an orderly
a pricing basis even if they are STP, NDD accounts,”market.
Richards explains. “On a retail forex ECN style system,
while it may operate on a STP basis, the counterparty“That being said, the way to combat this circumstance
to the client’s transaction is ultimately a prime broker,is to add more liquidity venues to our system,” Ditlove
who is not aware of the identity of the client. Instead,continues. “MBTrading is an aggregator of liquidity;
the prime broker has a credit relationship only with theif we find that there is less then optimal liquidity we
broker counterparty, that is, the company you wouldadd more banks as sources. But that doesn’t change the
normally open an account and deposit your funds with.fact that our routing algorithms are very fast and our
Retail ECN models eliminate the inherent conflict ofliquidity provider relationships are fairly deep, so the
interest that exists with a MM, but do not truly operatesystem will generally find a way to get a fill in a timely
on a settlement basis.”manner.The main point that I would focus on is that
any slippage that occurs on our system is a function Costs and fees to trade on ECNs depend on different
of global supply and demand, as opposed to a DD factors, according to Zagara. Generally speaking, he
that refuses to give a retail client a fair deal in order to says the trader is offered an ‘all inclusive’ commission
maximise their own profit.” quote which includes the broker’s profit and fees.The
broker then pays its fees to the prime broker and to theECN settlement
ECN itself, which charge a transaction or clearing fees,On how the FX ECN model works and how it
similarly to futures exchanges. Some of these chargesoperates on a settlement rather than pricing basis,
do not apply to what Zagara considers to be ‘homeRichards says because forex is a non-centralised
made’ ECNs. Also, he notes that while more brokers aremarket, there are two ways for retail traders to access
embracing the forex ECN style, we can expect to see ait; either through a MM offering marked up liquidity
growing commission battle among brokers, which willfrom one or several liquidity providers, or through an
eventually benefit the traders; a similar path that theECN-style system.
electronic futures have followed in the past.
|142 april 2010 e -FOREX
Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36  |  Page 37  |  Page 38  |  Page 39  |  Page 40  |  Page 41  |  Page 42  |  Page 43  |  Page 44  |  Page 45  |  Page 46  |  Page 47  |  Page 48  |  Page 49  |  Page 50  |  Page 51  |  Page 52  |  Page 53  |  Page 54  |  Page 55  |  Page 56  |  Page 57  |  Page 58  |  Page 59  |  Page 60  |  Page 61  |  Page 62  |  Page 63  |  Page 64  |  Page 65  |  Page 66  |  Page 67  |  Page 68  |  Page 69  |  Page 70  |  Page 71  |  Page 72  |  Page 73  |  Page 74  |  Page 75  |  Page 76  |  Page 77  |  Page 78  |  Page 79  |  Page 80  |  Page 81  |  Page 82  |  Page 83  |  Page 84  |  Page 85  |  Page 86  |  Page 87  |  Page 88  |  Page 89  |  Page 90  |  Page 91  |  Page 92  |  Page 93  |  Page 94  |  Page 95  |  Page 96  |  Page 97  |  Page 98  |  Page 99  |  Page 100  |  Page 101  |  Page 102  |  Page 103  |  Page 104  |  Page 105  |  Page 106  |  Page 107  |  Page 108  |  Page 109  |  Page 110  |  Page 111  |  Page 112  |  Page 113  |  Page 114  |  Page 115  |  Page 116  |  Page 117  |  Page 118  |  Page 119  |  Page 120  |  Page 121  |  Page 122  |  Page 123  |  Page 124  |  Page 125  |  Page 126  |  Page 127  |  Page 128  |  Page 129  |  Page 130  |  Page 131  |  Page 132  |  Page 133  |  Page 134  |  Page 135  |  Page 136  |  Page 137  |  Page 138  |  Page 139  |  Page 140  |  Page 141  |  Page 142  |  Page 143  |  Page 144  |  Page 145  |  Page 146  |  Page 147  |  Page 148  |  Page 149  |  Page 150  |  Page 151  |  Page 152  |  Page 153  |  Page 154  |  Page 155  |  Page 156  |  Page 157  |  Page 158  |  Page 159  |  Page 160  |  Page 161  |  Page 162  |  Page 163  |  Page 164  |  Page 165  |  Page 166  |  Page 167  |  Page 168  |  Page 169  |  Page 170  |  Page 171  |  Page 172
Produced with Yudu - www.yudu.com