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one central solution. Tis gives brokers the flexibility needed in order to operate their brokerage firms how they choose, according to their specific business models,” Cohen continues. “With a team of experts, Leverate assists brokers with configuring hedging strategies in the Leverate Risk Management System, and the team works individually with each broker to configure the settings of the brokerage by arranging groups for market making and STP, accordingly.”


Leahy says his company focuses on the MetaQuotes Platforms for clients: “Within MT4 and MT5 there are ways to segregate client accounts that allow brokers to offer different pricing models to clients on the front end, and handle client orders differently on the back end. Some jurisdictions now require proof from the brokers that they are STP’ing each client order. At CMAP we use oneZero Financial Liquidity Bridges that give our clients full reporting capabilities, such as detailing client orders into the MetaQuotes platforms, sending orders to the execution platforms, and matching them with executions and responding messages back into the Metaquotes platforms.”


While Ralich says offering a platform like MT4 is an easy way to attract clients, it can also be more difficult to differentiate a MetaTrader offering from other brokers because of its wide usage. However, he adds: “Offering multiple platforms and trading facilities (such as web based, mobile, and more,) to clients is ideal from a sales standpoint, but it can be difficult to risk manage risk and administrate clients across


multiple platforms. At oneZero, we work with our brokerage partners to develop and deploy technology solutions that centralise risk management across multiple platforms, and standardise client on-boarding, CRM and administrative functions into a centralised back office.”


Platforms and infrastructure


On the key considerations for choosing trading platforms, hosted servers and data centres, Ralich comments that brokers should look at a few factors: what type of clients they are looking to attract; where these clients are located geographically; and what regulatory restrictions exist for trading in these specific areas. He adds: “In an STP model, regardless of where the trading platform is hosted, the trades will need to make it to an ECN or bank eventually. Te broker must work to reduce latency back to their liquidity provider (which in most cases means routing back to New York). Services like hosted bridging, VPS and co-location can help augment an STP offering. Tis type of combined set up allows the client terminals, trading server and liquidity to all sit in the same location. At oneZero, we have recently deployed an end to end solution in Equinix NY4 to help our broker partners minimise latency between the critical components of their system and their clients.”


While Leahy recommends: “Take a hard look at your client base and prospective client base. Not all brokers need the highest level of speed, stability and reliability. If you are in a jurisdiction that regulates MTP lightly, and have true retail clients with smaller


account sizes, then a top tier data centre is not a necessary expense. But if you operate within a regulated environment where the penalties for platform issues can be expensive, or if you have high value clients who are knowledgeable, then the costs of using technology services such as our Equinix NY4-hosted platforms can not just keep you out of trouble, but can be a competitive advantage.


“Location is also an issue,” agrees Leahy. “Brokers in Japan who wish to STP client orders face the distance of a round trip to the New York City area to access the pricing engines of the liquidity providers. But if they handle risk in a traditional dealing desk model, they can approve client orders without the digital round trip to New York. Most platforms allow for both methodologies, but these issues need to be discussed with your technology providers.”


Higgins also notes: “Once the trading platform has been chosen it needs to be hosted in a professional data centre. Tere are many cheap web- centric data centres, but their service is normally very poor as they are designed for marketing websites and not for real time, high value trading. Choose a main data centre that has built-in redundancy, multiple internet connections and 24x7 customer support,” he recommends. “Always have a backup data centre, in another location, provided 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.”


INSTITUTIONAL FX SERVICES - THE BROKERS HANDBOOK 2012/2013 | 25


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