RETAIL e-FX PROVIDER
just do with a FIX connection. Tere are so many more parameters. To grow the customers in a new or different segment (besides the broker’s critical mass,) is something that needs to be planned and carefully investigated. What happens when these new clients enter the system and start to trade, in terms of the cost to existing customers, or together with the existing customers?”
“We deal both with buy and sell side institutions, as well as brokers and asset managers, also providing a MAM solution to cater for their needs,” says Kantartzis. “Bigger institutions would rather focus on their core business and outsource such services for their retail FX needs, rather than commit to research and development that would require time
“To operate an advanced technical platform with all its components, security issues, internet bandwidth and low latency demands is difficult, very expensive and time consuming. Brokers will generate and find more business in a complete administrative package…”
and financial resources. Instead, our proven track record delivers a one stop shop solution for their FX clientele.”
Revenue models
Revenue sharing on a White Label solution consists of share of spread and we enable our partners to add a per lot per side and US$ per million, comments Melia. He says: “White Label providers appear to be offering various forms of revenue sharing options for FX these days. IG Markets’ FX offering to direct clients is a spread based product, so the client pays the spread with no additional commission. When we configure commercial agreements with White Label partners, we pay the partner a percentage of our spread. On top of this, we will facilitate additional commission charges such as ‘per lot per side’ for OTC products, and a US$ per million on our DMA FX products when additional services are offered by the broker. Where brokers add addition commissions to our FX products, we enable them to retain 100% of the additional commission.”
On the other hand Haman feels the most equitable fee for a White Label setup is to charge per volume of the customer’s usage. For example, if the customer uses only one platform, there is a volume-charge based on that. Whenever they open or close an order on another platform as well, the charge will increase slightly. He adds: “Low spreads have been the marketing model for years, and we now see, maybe sooner than expected, that spread cannot come down much more and the ECN pricing model of a charge per million traded is more and more commonly. If the customer wants the freedom of taking the best parts of three platforms, he will pay slightly more than the customer that uses only one platform.”
Tim Haman 156 | april 2012 e-FOREX
Behnstedt comments that most of the White Label solution providers are following an approach where they get an upfront fee and then take part in the trading by getting a specific percentage on the traded volume. “Tat model still looks attractive to most White Label clients, although it involves basically sharing cost and revenues. Te best way is to work out a pricing solution together that fits both sides; the last thing that helps setting a White Label solution in place is frustration on either side about the pricing model. Ultimately, for one White Label client it can make sense to pay a fixed fee and a very small percentage of the traded volume, while for another White Label client this might be completely different,” he concludes.
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