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management in a way they don’t understand,” observes Ralich.


“Most commonly we’re looking at brokers who have tended to build businesses from front to back, which has led to back- offices - already under strain - trying just to catch up. Te sensible approach is to build both at the same time and in parallel,” explains Higgins.


Te problem with all these developments is that there are few companies with an out-of-the-box solution. Te larger institutional systems simply aren’t suitable without considerable modification or they are too expensive.


Integration issues


Te retail and smaller to medium sized brokers have a choice of good packages such as Spectrum, MarginMan or TinkIS HQ, which provide individual aspects of CRM, reporting and audit trail requirements, but for front-to- back systems, especially taking into account legacy systems, there is a growing need for integration.


Tis has led to a group of companies positioning themselves to cater for the more cost- conscious FX brokerage market and provide a way of integrating legacy systems into new best-of- breed solutions. Tey provide flexibility in choice of system features and are positioning themselves for future market developments.


Gold-i, for example, works with a variety of partners using the Gold-i Gate Link to convert MetaTrader functions into standard FIX messages, which can then be translated real-time into the corresponding back-office messages using a Gateway.


Just as the internet has boosted electronic FX volumes, so it is seen as offering parts of the solution to integration. Te Gold-i system produces sql-based reporting and entry, critical to clients, while oneZero’s Advanced Reporting and Monitoring System (ARMS) is another web- based reporting tool and with back-office capabilities.


It brings the additional benefits of lowering equipment costs, being device agnostic, says Ralich, “Anyone running a business pays a training expense in implementing new packages, and at least with web-based design for systems, staff across the business have to learn just one, more intuitive interface.”


Leveraging the Cloud


oneZero is planning to introduce a full FX brokerage administrative system platform in addition to its bridging and risk management offerings utilising an SaaS model. “SaaS might not be suitable for everyone, and apart from traditional installation on the client’s premises, we can offer a cloud solution, saving the brokerage IT costs and lowering the price,” explains Watkins.


In particular there are huge cost-benefits with the front to back-office based on a cloud, with oneZero proposing to offer the solution on a pay per transaction cost, minimising up-front expenses.


But without being able to link and use the data between the front and back-office, there are short-comings to the functionality. So it is a balancing act for the FX brokerage.


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


“Te company has to look at a balance between systems integration and features, along with time of implementation and cost – it’s a triangle and you can only control any two sides at the same time,” describes Ralich. “If you want it feature-rich and immediate, then it’s likely to cost, but if you’re cost-conscious maybe you can compromise on features, but on time-to-market you cannot.”


Conclusion


It seems FX brokers are being pushed towards a more serious consideration of those over- worked specialists in the back- office. Tey are finally becoming more fully aware about just how critical their work is in controlling operational risk and to an extent counter-party risk whilst also helping to deliver ever-more granular and important transactional and trade execution data.


For those FX brokerages who have struggled along with add- ons and plug-ins from two-man bespoke IT development houses, they will find the increasing burden of maintenance costs, along with changes to market structure, the regulatory environment and increase in volume transactions, too much to bear.


“All FX brokerage firms should now be thinking forward and considering how they can future-proof their systems to cater to more clients, not just for the next six months but for the next six years, across the entire front to back-office value chain,” concludes Ralich.


Business process and outsourcing


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