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and other exchange-traded instruments - then that brings further regulatory issues and the need for correct data to prove everything.”


Client demands


Even if the regulatory issues had not been imposed, Andrew Ralich, CEO of oneZero, thinks many brokers would still be looking for new ways to improve the back-office as information is becoming ever more critical to other parts of the brokerage.


“It’s not just the regulators, but the brokerage and their clients who want more insight into trade execution and reporting from the back-end as to what’s going on,” he says.


In trying to reduce risk and encourage new business, the FX broker now faces a situation of having to electronically link to multiple prime brokers, exchanges and multiple liquidity providers. Firms are trying to match deals and prices, times of execution, achieve reconciliation in near real-time to satisfy both their own risk management procedures and the demands of the regulator.


“Now you also have the demands of the clients – they’re demanding a higher level of service and the brokers are realising they have to allow the front and back-office to talk to each other seamlessly either by bridging or linking,” says Higgins.


Brokers are realising their customer relationship management (CRM) systems also need to use data acquired by the back-office to provide more services, for example an


automated email response when trades are taken and settled, performance charts and more.


“Retail traders and investors are becoming as discriminating as the professionals, wanting to know how fast and at what price they’re trading with which liquidity providers, examining latency and slippage, and finding which market suits their trading styles the best,” explains Watkins.


And this ‘front-end’ service is entirely dependent on what comes from the back-office in real-time.


Industry factors


But if all these data demands were not enough, changes to the industry structure are also creating demands. Watkins points to the burgeoning sector of Introducing Brokers. “Each of these wants their client to have their own experience and this


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


demands multiple logins and effectively a company-within-a- company,” he says.


Te demand pressures are also coming from the other end of the market. “Tere’s also an issue of consolidation, a problem of legacy systems,” warns Higgins. He points out that the bigger banks are envious of the growth in the retail FX market and there are increasing moves to take over smaller FX brokers. “Te bigger guys want to integrate into retail systems but they’re finding them far too disparate. Even the way administrative operations have been set up are very different to the investment banks,” he adds.


“Tese institutional players are often surprised by how these retail systems have been built out compared to more traditional back office models – retail platforms like MT4 expose access to risk


Business process and outsourcing


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