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While Cohen says: “Uptime and reliability of servers is a huge issue for brokers, as poor performance affects the broker’s reputation and opens the broker to additional risk. Robust systems that are able to cope with very large volumes of small trades, portfolio manager accounts and so on are totally reliant on n the quality of the bridge and execution mechanisms.”


Ralich warns: “It’s critical that your bridge technology provider completely understands the platforms they are working with. We have spent thousands of hours testing, researching, and optimising the ways in which we interface with MT4 and other trade systems. At this stage in the evolution of the bridge industry, it’s fairly easy to tell what third party providers have the best performance; they are the ones maintaining strong partnerships with large, enterprise brokers.”


He advises that brokers keep an eye on their bridge technology provider: “If you see your provider is not being used by, or even worse being let go from, a major player, it is most likely because their technology has proven not to scale. Many brokers do not do their research up front and get entrenched in a solution that will never allow them to reach their full potential.”


White Label choices


Liquidity bridge vendors that are succeeding in the market often offer White Label solutions in partnership with brokers, with technology coming from vendors and liquidity from brokers, says Higgins. Te combination of superior technical knowledge and operations from vendors and


superb liquidity from brokers is a winning combination, he remarks.


White Labelling options and service models are available for the provision of liquidity bridging products. Cohen comments: “Today White Labels are able to receive the same offering available for direct participants; the limitation is always placed on the broker as to what to offer its clients. So it’s a factor of two, the back office and bridging capability and the brokers wish.”


Te most popular service model for White Labelled liquidity bridging is a flat monthly fee plus per volume fee, claims Latypoff. He notes: “Some companies give out liquidity bridging as a part of their more complex offering, with a price included. Other companies even offer liquidity bridges for free, simply widening execution spreads (thus, it’s the same thing as having per volume fee, just another flavour). Our company sells bridges at a flat rate, on single payment basis, which is convenient for brokers that want to be independent in their business.”


Choosing a provider


“Te choice of liquidity bridge vendor is vitally important for a broker”, says Higgins. “Te decision should be made carefully, and certainly not on price alone. Te broker should be able to see their vendor as an extension of their own company, building a strong relationship with them. Important areas to consider are customer service, reliability, performance and low- latency, asset class coverage, and functionality. Your vendor should


be happy to offer customisation on demand and should welcome your requests to extend their products.”


Te main factors to consider are the range of products, the average spread and liquidity depth, speed of execution, rejection rate, rules options, quality of the risk management platform, options in running multiple books and regulation and type of regulation, says Cohen.


INSTITUTIONAL FX SERVICES - THE BROKERS HANDBOOK 2012/2013 | 83


Tom Higgins


“Any liquidity bridge with a latency of more than a few milliseconds is just not acceptable any more. Advanced techniques like memory, resource and thread management and developing in pure C++ allow massive performance potential, giving a superb trading experience to brokers’ clients and the lowest possible slippage.”


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