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or as little risk as the broker wishes, allowing them to select and vary their risk profi le as the markets ebb and fl ow.”
While Higgins says: “Smart brokers will constantly assess their clients’ ability to make profi table trades, to help them decide who to cover and how much to cover. Brokers may choose to cover 100% of trades, 50%, 0% or any other level. Some brokers, may even use advanced facilities like reverse coverage where they bet that the client has got it 100% wrong.”
Pimp that bridge
Liquidity bridges can now be confi gured and customised to automate and solve many of the risk management issues facing FX brokers, says Ralich. oneZero Financial Systems has had great feedback on its latest round of liquidity bridge innovations, which have been geared specifi cally towards allowing brokers to manage their entire risk base, not just trades that have been handled via STP from oneZero Financial Systems’ back offi ce interface, states Ralich.
He notes: “By providing brokers with more transparency in terms of A/B Book exposure, we have put the information they need right in their hands, enabling them to make the correct decisions in real time. We’ve identifi ed limitations in how various trading platforms consolidate and manage risk, and have provided tools to our clients to transcend traditional ‘B-Book’ execution and dynamically monitor and adjust STP parameters and spreads using information and settings available through our technology.”
reducing risks down to zero. Moreover, all trading operations can easily be marked up by arbitrary values, allowing brokers to execute trades for their clients at a price constantly worse than prices they get at their counterparties, thus brokers can earn a constant amount of money on that price diff erence on every lot traded. Also, bridges do not enforce brokers to use only STP for all clients. One can easily choose groups of clients to stay on B-book, that is not execute their trades against external liquidity, thus retaining profi tability of dealing desks with an option of switching quickly.”
Business engines
T e newest integrated bridging solutions off er low latency STP, fl exible order routing, advanced customer profi ling and wide administrative capabilities, in addition to their basic liquidity management operations. Commenting on his company’s product, Cohen says Leverate’s LX Risk acts as a single point of information, gathering vital, online intelligence such as exposure, profi t and loss, and rules settings in a
TRADE EXECUTION ECN & STP
Cohen remarks: “Our risk management platform, LXRisk is a lot more than just a bridge; it has the capability of running specifi ed execution rules per trader, per amount and per symbol. Automation allows true non-dealing desk capability and leaves no confl ict between the broker and its clients. Along with the back offi ce and reporting tools available, the broker can monitor the success of his trading behaviours and total results of the brokerage.”
While Latypoff adds: “Contemporary liquidity bridges support all kinds of trading operations and all execution modes,
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