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rebates and FX signal data, but attention to customer service is what differentiates them from their competitors.


Developing a comprehensive understanding of what customers need allows the service-based IB to identify the right broker for a client as well as additional services they might need to achieve their trading objectives. Generally a service-based IB’s relationship with brokers also benefits retail clients since the IB can help clients secure bonuses and other offers they would otherwise be unable to access.


Service-based IBs also serve as advocates for their clients when there are trading issues, often allowing traders to solve a problem with just one phone call to their IB.


Clients who prefer to work with service-based IBs are typically people who would want to speak with a live customer service representative rather than cope with an answering service or set- up accounts exclusively through a website. Tese clients derive value from having a dedicated point of contact and the ability to reach them for problems and questions. Clients using these firms typically receive the benefit of a more “hand-holding” approach and a greater attention to detail than with other types of IBs. Service- based IBs can be a great asset for clients in terms of broker access and general market knowledge.


On the other hand, a disadvantage to the service-based IB may


Trading signals and social media IB’s


Social media and signal service providers/IBs are as new as the technologies they exploit and took the lessons from the successes of Facebook, Twitter and other social media sites, and applied the model to the forex market. IBs who were early adopters of social media trends in this field encouraged the sharing of trading ideas, sentiment and the performance of individual traders in real-time. Tese IBs gradually evolved into facilitating the sharing of signals from one user to another, allowing clients to “follow” fellow traders and directly mimic the trades in their own accounts. Tese services simulate traditional


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


include a decreased level of rebate due to the added support clients receive. An FX client should contact both price-based and customer-service brokers to determine the value package when shopping for a broker.


money-manager programs, without the larger minimum investment and commitment to a long-term strategy associated with commodity trading adviser (CTA) programs.


Clients have the ability to easily receive trade signals direct to their forex accounts from fellow traders by use of a Signal provider/IB. Te signals can come from any number of traders, both new and experienced, and can allow for clients to diversify into multiple automated and discretionary programs.


Some drawbacks can include additional costs associated with technology fees and the risk of following traders’ strategies without knowing experience or background. Clients should be careful to always test signal services by tracking them over a period of time to evaluate performance and risk before actually investing funds.


White Label Services


Most clients are not aware that their broker may be a “White Label” of a larger broker/FCM. White label firms are brokers who outsource their liquidity from an FCM and act as their own entity. Tey service all aspects of the client accounts just as a true broker would, including an operations department, trading account parameters, technology solutions, firm strategy and marketing. Te difference from an genuine broker is that a white label firm does not actually clear trades or, in most cases, hold client funds.


In a market where regulatory agencies impose high


Brokerage Operations


Business Operations


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