RETAIL e-FX CLIENT
Bridging solutions are increasingly used by trading desk brokers operating in the retail FX space. “Improving execution is no easy task for these brokers. Tey need systems that interface effectively with both their own clients and the market at large, as well as a good risk engine that can tie it all together and still produce profit. When a broker also offers client side trade processing analytics the challenge becomes even greater, but customer-focused brokers will win quality business in this way.
DMA Jeff Grossman “Within a DMA environment, the brokers
can only really add value in terms of the number of venues they connect to, or possibly by offering DMA through their own GUI”
Positive contribution
As a result of the growing professionalism of retail FX traders, the attractiveness of retail FX ECN trading platforms has greatly increased, says Grossman. “In an order-driven model where orders are all displayed any increase in market participation will generally improve liquidity and market quality . And all higher frequency traders contribute relatively more provided that their interests are fairly represented. Tis is dependant on the level of transparency and its consistency within the Platform Rules. Te trend is increasingly evident on the ECN platforms as well as some single bank platforms.”
Transparency can generally be seen as a gauge of the platform’s attitude towards these type of traders but, says Grossman, there is a flipside to this relationship between platforms and retail traders. “Every platform has to have a threshold in terms of the minimum displayed order size. If they were to allow too many small orders in a decimalized market can lead to an aberrations of liquidity and Market data. In general orderly markets standard order sizes or minimum quantities.”
170 | january 2012 e-FOREX
One developing market for retail brokers is the provision of DMA services, however it is still at a very early stage, says Grossman. Furthermore, there is limited incentive for brokers in this development. “DMA is a dumbing-down of the process in many ways,” says Grossman. “It increases transparency and decreases latency but it limits the opportunities for brokers to add value so is not that lucrative. Within a DMA environment, the brokers can only really add value in terms of the number of venues they connect to, or possibly by offering DMA through their own GUI.”
In general, there are currently very few toolsets for assessing the execution speed of platforms, says Grossman, meaning that most retail FX traders would have to build their own system rather than relying on the limitations of many current analytics offerings. Such technology is more prevalent in the institutional space which does beg the question of how seriously service providers are taking the retail FX space.
“I think they all take the retail FX markets very seriously,” says Grossman. “Te retail participant has the potential to change the whole characteristics of the marketplace. Te issue is how you structure a product that suits both the retail trader and the professional. At the highest level of retail trading, it is not a problem but as you go further down the chain, this issue becomes more pronounced.”
Te growing use of expert advisors and trading robots was one of the first indications of the growing professionalism of the retail FX trading space, says Grossman, but is it possible to pinpoint exactly what defines the level of professionalism among the vast number of retail FX traders? In many ways it is simply down to order size, says Grossman. “Once you are dealing in levels of $100,000, you are at the races but brokers also need a critical mass trading this size to ensure that their market and order book does not fragment and become chaotic.”
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 |
Page 173 |
Page 174 |
Page 175 |
Page 176 |
Page 177 |
Page 178 |
Page 179 |
Page 180 |
Page 181 |
Page 182 |
Page 183 |
Page 184 |
Page 185 |
Page 186 |
Page 187 |
Page 188 |
Page 189 |
Page 190 |
Page 191 |
Page 192 |
Page 193 |
Page 194 |
Page 195 |
Page 196