>>> Pressure cooker
As to what back offi ce pressures are facing retail FX brokers, who are now having to cope with increasing trade volumes generated by high frequency, automated, mobile and algorithmic traders, Tom Higgins, CEO at Gold-i, comments: “T e ever- increasing number of accounts and transactions makes managing a broker’s back offi ce a complex and error prone task. Many medium and large brokers are implementing the Gold-i Gate Link to connect their back offi ce system to the front offi ce trading systems. Using this approach they can have instantaneous access to all front offi ce data in their back and middle offi ce system, in true real time.”
Heather McLean
Liquidity bridges are now seen as an established and crucial element in delivering electronic forex trading services. Heather McLean explores how they can also help FX brokers capture more business, increase customer loyalty and manage risk more effectively by streamlining the back offi ce and making operations run in real time, a vital task given today’s rising retail trade volumes, and increasingly savvy customers.
A
ndrew Ralich, co-founder and CEO at oneZero Financial Systems, says that over the past four years the retail FX industry
has grown signifi cantly. T is growth has created a landscape where both competitive and regulatory pressures continue to test the limits of the traditional back offi ce infrastructure, he notes, adding: “Lower trade size restrictions designed to attract business from emerging markets such as Asia, where micro- trading is immensely popular, have introduced a scaling challenge for pre and post-trade execution. T e immense volume of requests that come from more accessible algorithmic trading platforms such as MetaTrader4 still needs to be archived, reconciled and audited. When oneZero got into the retail FX space, we were focused on addressing this challenge for large, enterprise-level brokers looking to off er the MT4 Platform, and are now able to build on that technology foundation to off er routing and back offi ce solutions to organisations that are continuing to cope with the rise in trade ticket volumes,”
“Increasing trade volumes are a blessing, as when people trade more, brokers prosper,” says Timur Latypoff , director at Tools for Brokers. However, he adds that supporting growth is not always a smooth process, as more brokerage fi rms are faced with the limitations of underlying technological solutions; trade servers work slower, failing to cope with high numbers of clients and trades, even becoming less stable. “Most of the problems can be mitigated by using third party solutions, but not all. Either way, it’s better to be prepared for them beforehand. When the lightning strikes, things go awry,” Latypoff warns.
Latypoff continues: “Another issue is since high frequency trading is getting more and more widespread, traders search for (and eventually fi nd,) better execution conditions. Brokers nowadays cannot aff ord to have execution delays anymore; everyone’s spreads are getting tighter and people understand that the golden days are over. Now only those who can show both top notch client service and outstanding technological advantage at the same time will survive.”
T e back offi ce is always a contentious area and is even more so today, as the infl ux of trade volumes is multiplied by high frequency, automated, mobile and algorithmic traders. Doron Cohen, co-CEO at Leverate, notes that even more challenging than high frequency trading are the challenges that social trading present. Social trading requires coping with a diverse amount of trades, including high frequency trading, but increased exponentially by dozens or hundreds of copiers of successful gurus on social networks. Cohen continues: “Leverate solved this problem with LXRisk, a multi liquidity and full control risk management system, which not only supports Sirix social, but also shows the brokers full exposure per book as well as its P&L in a single location.”
july 2012 e-FOREX | 125
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