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see delays in the account opening process, which can be a competitive disadvantage. Additionally, asking a technology provider to interface directly with end user traders could trigger regulatory issues.”


As for the most effective methodologies for client on- boarding and retention schemes, differentiation is key, according to Higgins. “Find a way to differentiate yourself from your many competitors, and then develop a coherent and unified image for the company. High quality and superb customer service are always the most important part of a brokerage, especially when the space is already crowded. If you give a good deal to your clients and treat them fairly, then they will be loyal to you and will recommend you.”


Back office operations


As to how brokers can best utilise CRM and other systems to optimise their back office operations and payment processing systems, Behnstedt says that within the last couple of years, huge changes have happened in the client relationship management market, and these changes will continue. “Just 10 years ago this area was about maintaining client addresses, but now topics like client segmentation, ranking, behavioural targeting and others are playing an important role in the overall client relationship management approach. We believe that using a properly evolved CRM approach that will be continuously optimised is maybe the most effective way to ensure your brokerage firm


will continue to grow based on a captive client base.”


Ralich adds: “Centralising the CRM system is an essential part of offering multiple platforms. It can be difficult for a broker to train administrative staff on multiple on-boarding and client upkeep methodologies. We have worked with a number of companies to implement SalesForce and other custom CRM integrations directly into the MT4 Platform.”


Leahy also states that, “CRM software that is linked to and integrated with client trading platforms is a huge step in the evolution of client retention, so we consider it critical to the success of retail-facing brokers who are targeting a large audience of prospective and live clients. We have worked with a few external software providers to link MT4 platforms to existing CRM platforms. At a minimum we think that brokers need to have some level of software that integrates with the trading platforms so that brokers can handle the process of compensating Introducing Agents in real time. Introducing Agents still represent a large client base for the brokers and they want to run their businesses efficiently.”


Bridging


When it comes to selecting a liquidity bridge provider, a start up brokerage has a number of different options, notes Ralich. He says some companies offer liquidity and bridging in one bundled package. Alternatively there are also bridges available that are liquidity-agnostic, and work with any feed or API.


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


He states: “Choosing to go with a bundled package means that down the road, if you are unhappy with your bridge or liquidity, you will have to swap both components. Tis can be very difficult to accomplish seamlessly. Brokers must make sure they are choosing partners that will scale both in technology and liquidity offerings, in a way that meets their goals as a firm.”


Higgins also says that if the broker wishes to carry risk, the primary driver is how much capital they have and the requirements of the particular regulator. “A broker may choose to 100% cover certain asset classes, such as Futures and Equities, but run 50% of the risk on FX. Te bridging technology that is chosen needs to support these complex risk management decisions and many liquidity bridges are simply not capable of this,” he comments.


Conclusion


Finally, Higgins concludes that partners and plans, when united, mean a new company can be off to a flying start: “A modern brokerage is comprised of a mix of risk management, PR, marketing and technology. When the risk management and technology have been selected and implemented, an integrated PR and marketing plan needs to be developed. Marketing and PR agencies can assist but the ideas must come from you. Partnerships that bring value to both parties are always a good idea, so make sure that you can clearly identify the benefit for both sides right from the start,” he says.


Brokerage Operations


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