RETAIL e-FX PROVIDER
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offering pre and post trade services in a way that supports client business processes like they have never seen before,” he says. “One key topic here is how to leverage interaction between different technology solutions. For example, using the mobile phone, a limit order will be captured and based on a predefined threshold, and the user will be informed via his mobile solution that the limit order is now just a couple of pips away from being executed, then information about the execution. Tese kind of ubiquitous technology uses are facilitating the advent of business processes always at the client’s side. New appliances like tablets have also to be taken into account.”
Stephen Leahy
“Budget for and hire attorneys, consultants and technology providers who have existing global clients and who are knowledgeable in global regulations. Few MTP firms
operate in just one jurisdiction now, so a global perspective by all parties influencing strategic decisions is necessary.”
by a different supplier and implement real time replication between the two. And choose the fastest servers that you can afford as this is much cheaper than upgrading later as the business grows.”
Revenue growth
Ralich adds that one of the easiest ways to predictably grow revenue based on volume is to employ a pure- STP model, where the majority of revenue is generated through spreads and commissions. He explains: “Tis limits the swings in revenue based on client trading during the early stages, as the brokerage becomes more sophisticated in understanding its appetite for risk and clients’ trading habits. As a start up FX brokerage matures, it is most likely they will look to employ a combination model of Market Making and STP. It’s important to choose a technology that will be flexible to scale to either model as the business needs of the broker evolve.”
Behnstedt notes that for growth, differentiation is vital. “Fast trade execution is key, but again, the real competitive differentiation will be achieved by
152 | january 2012 e-FOREX
While Higgins says: “One of the first and most important decisions a new forex firm has to make is regarding risk management. How much risk is the company prepared or capable of carrying, and therefore how much business will they be looking to cover in the market? Tis will guide their technology partner selection. If they favour Market Making, then advanced position monitoring, such as provided by the Gold-i Position Keeper, will be required, and if they prefer to STP into the market then a fast and reliable bridge is needed, such as the Gold-i Gate Bridge.”
Higgins stresses that good connectivity to liquidity providers for rates or for STP is essential and observes: “High latency or unreliability will have a major impact on profitability and client retention. Institutional firms opt for dedicated private wires between counterparties whereas nearly all retail brokers rely on the internet because of cost. Brokers should choose technology partners who will allow them the freedom to choose the liquidity providers that best meet their needs, and who are willing to customise and enhance their products if required.”
Outsourcing
But you don’t have to do it all yourself. On outsourcing, Behnstedt comments there are companies, especially those using the opportunities provided by white labelling systems and processes, that have outsourced almost everything. “Tese companies just have their brand and logo still held internally; the rest is in the hands of other companies. However, others have not outsourced anything at all as they believe they can provide everything on their own. In general, we can say that outsourcing itself will not bring any added value to the value chain overall, but that it enables every piece of the value chain to be questioned in terms of ‘are we offering the right level of service here at a cost level that still allows us to
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