Pushing the boundaries in retail forex with cutting edge trading services

The fast growing retail forex market is hungry for technology to fuel the needs of smart and increasingly savvy investors who are looking for trading opportunities and the quickest ways to execute them. In response to this powerful demand, Heather McLean discovers how a new breed of retail FX broker is utilising state of the art technology coupled with fully customisable trading platforms to provide powerful suites of online services catering for mobile, automated, social and power traders.

First Published: e-Forex Magazine 55 / Retail FX trading / January, 2014

It is all about pushing boundaries with cutting edge trading services, says Marc Spaelti, first vice president and chief operating officer for the RM and brokerage department at Dukascopy Bank. He comments that this trend is a consequence of the evolution of the consumer IT industry in the past decade, and that it is now a necessity to provide an up to date brokerage to be able to serve that demand, or lose customers. 

Spaelti explains: “The number of persons that are trading online is constantly increasing. They use mobile phones, tablets and computers to communicate and receive information.  E-commerce is simply responding to an increase in demand to access online trading accounts through different means. Clients want to trade or check their account now, no matter the means. Limiting that access means that you limit the prospects you can reach.”

George Stylianou, chief marketing officer, ForexTime (FXTM), comments that since the introduction of social trading, there has been a revolution in the way people trade. Historically, the core trading audience was split between experienced traders and novice traders looking to learn. 

Now, Stylianou says things are changing: “With the arrival of social trading, forex has been opened up to a whole new audience consisting of individual investors who are either too busy to study the market and make their own trades or who haven’t yet developed advanced trading skills. By allowing traders to follow and copy those trades executed by more experienced investors, we have now multiplied the target audience of prospective traders.”

Accessing research and analytics

With the deployment of mobile and social investment technologies in retail FX, brokers now need to consider new ways for providing research and analytical tools to their clients rather than just utilising traditional methods. This includes through their trading platforms, websites, TV channels and email. Ryan Nettles, director of FX services at Swissquote Bank says that, “As more traders are using mobile phones and social media for accessing market information, brokers are targeting these venues to get their research and analytical tools to their clients.  At Swissquote, traders can still access our research and analytical tools from our website, trading platforms, TV and email, but now our clients can also find this information from our multiple mobile applications, through social media sites including Twitter and Facebook, as well as third party trading venues such as Bloomberg.” 

Some brokers are also providing access gateways to institutional grade research and analytical toolsets for their retail investors and traders that previously was never available. Spaelti comments: “Access to institutional grade research is an added value that is often very expensive to implement for a general retail audience. Restrictions on redistribution or copyrights may render it impossible. At Dukascopy we have put in place our own team of analysts that produce proprietary information, fit for redistribution,” Spaelti adds. “Using modern ways of communicating the various products, clients have  a wide choice of what to receive and how to access the information, for example by receiving reports by email, SMS alert messages, and our own FX spider that detects news and articles on selective subjects or key words or in discussion topics on our community pages.”

Marc Spaelti“It’s the capacity to take care of clients and to follow up on their specific needs that counts. It is very often the small detail or attention a client receives that counts most. This requires an ability to think like the client.”

Marc Spaelti

“It’s the capacity to take care of clients and to follow up on their specific needs that counts. It is very often the small detail or attention a client receives that counts most. This requires an ability to think like the client.”

Tailored trading experience

A few brokers have focused on providing a more tailored trading experience for their clients, designed to meet their specific investment objectives and trading styles. Nettles comments that brokers are providing this tailored trading by offering multiple trading technologies and increasing functionality on their trading platforms. “At Swissquote, we provide four different trading platforms as well as seven mobile and tablet applications,” he explains. “Each technology offers a multitude of functionalities. This allows our clients the flexibility to choose the platform which suits their personal investment objectives and unique trading styles.”

Tailored trading experiences are becoming more attractive for brokers’ clients. Stylianou comments that ForexTime was founded to offer a fresh and dynamic approach to trading. He says the company’s rapid international growth has been fuelled by the recognition of the benefits it offers through its regionally tailored solutions.

Stylianou adds: “One of the first regionally tailored products we launched earlier this year was our true Amanah account, the first Shariah-compliant account to be certified by leading Islamic scholars. This account follows the principles of Musharakah, a collaboration whereby profits and losses are shared. With ForexTime’s true Amanah account all Riba (interest) charges and rollover fees are cancelled.”

“We are also seeing growing interest in our new Cent account which gives clients the opportunity to trade currencies and precious metals with under a dollar, whilst still enjoying leverage of up to 1:1000, low spreads and instant execution,” continues Stylianou. “The Cent account addresses some of the criticism surrounding demo accounts, such as that traders using demo accounts do not behave entirely as they would if they were investing ‘real money’. By trading with Cent accounts you can get a real feel of the market while only trading small amounts of money. They are the perfect introduction to forex and allow traders to get a real feel of forex trading before upgrading to a more advanced account type.”

With the deployment of mobile and social investment technologies in retail FX, brokers now need to consider new ways for providing research and analytical tools to their clients rather than just utilising traditional methods

With the deployment of mobile and social investment technologies in retail FX, brokers now need to consider new ways for providing research and analytical tools to their clients rather than just utilising traditional methods

Yet Spaelti comments that when dealing with retail clients, you must also opt to increase efficiencies. “Tailormade solutions are generally expensive and if applied to a small group of clients, not necessarily cost efficient, at least in our business environment,” he notes. “The key is to use a global approach that allows the greatest number of individual client choices. We provide the client with a gateway, to which he can connect using his method of choice. While we do offer our own end product, any third party software can connect to our price stream and send trade requests.”

Fighting latency for faster trades

Leading brokers are also taking steps to specifically combat latency, so they can provide their clients with the fastest possible trading environment. Nettles states that a fast trading environment is a key factor in online FX trading. “At Swissquote, our systems are monitored 24 hours a day and are under constant inspection in order to provide the best service level to our clients wherever they trade using our technologies.”

Stylianou notes: “By collaborating with third party liquidity providers, ForexTime has been able to combat latency and provide our clients with faster execution and better rates. This is one of the hidden benefits that this approach offers clients; the client never sees this complex technological infrastructure, however it is critical to ensuring they receive the most competitive rates and fast execution.”

George Stylianou“Forex is a global industry so all brokers need to balance the strategic need to address client needs on a multinational scale while balancing regional and cultural needs.”

George Stylianou

“Forex is a global industry so all brokers need to balance the strategic need to address client needs on a multinational scale while balancing regional and cultural needs.”

While Spaelti comments: “Reducing client latency is usually done by moving servers closer to your clients and by moving one’s own server closer to the location of the interbank price feed. However, latency issues are often overrated; scalping strategies achieve higher advantages by paying attention to slippage during peak times than worrying about latency in an oscillating market. We have also noticed that providers have invested recently to protect themselves when short term volatility soars, by updating their price even faster.”

Aligning interests with clients needs

Aligning their interests with those of their customers is now differentiating many brokers from others, comments Stylianou: “Forex is a global industry so all brokers need to balance the strategic need to address client needs on a multinational scale while balancing regional and cultural needs. ForexTime has developed a range of products and services that meet this dilemma, such as the true Amanah account. These products and services are globally available but localised and tailored to the needs of the trader. Using this approach we put the trader and the trading experience first while still competing on a global stage.”

Nettles adds: “Brokers are aligning their interests with those of their customers by offering many investment and trading products as well as tools to make informed decisions. At Swissquote, clients have a huge range of financial products to invest and trade in and we also provide portfolio analysers and other analytical toolsets to help our clients be successful.”

Access to more markets

Some brokers are positioning themselves as one-stop-shops to meet increasing demand from investors for access to a wider range of markets, such as CFDs, binaries, and commodities. ForexTime is one of those brokers, claims Stylianou. “In less than one year since launching, we have expanded ForexTime’s offering to include seven account types to suit traders of all levels of experience, partnered with a wide variety of financial instruments including over 60 currency pairs, CFDs, futures, ETFs, precious metals and commodities,” he says. 

Yet Stylianou states it is more vital to concentrate on the underlying technology, and not be carried away with trying to offer a plethora of services: “It is a logical assumption that the more financial instruments offered by a broker, the larger their target audience is and thus it makes good business sense for a broker to offer a range of options including currencies, CFDs and commodities. The essentials a forex broker must offer include a reliable trading platform, such as MetaTrader, and a standard account on MT4. These are the bread and butter of what we do and anything on top of that is what sets a broker apart and expands their target market.”

Ryan Nettles“As more traders are using mobile phones and social media for accessing market information, brokers are targeting these venues to get their research and analytical tools to their clients.”

Ryan Nettles

“As more traders are using mobile phones and social media for accessing market information, brokers are targeting these venues to get their research and analytical tools to their clients.”

Innovation with their product and customer service offerings in order to deliver a more compelling value proposition is also a top concern for increasing numbers of brokers. Stylianou states that the future of forex trading is undoubtedly on mobile devices. He comments: “In the coming years I believe the de facto platform will be the seven inch mobile smartphones. As the technology improves on these devices and people’s behaviour changes. We are already seeing people trading while they are commuting to work, during their lunch break or even when they are at home with their family. Brokers will have to work hard to be responsive to the growing needs of traders.”

“ForexTime is aware that people want to get more out of their trading in less time, so everything we do is aimed at making the trading experience faster and more efficient. Traders want to open the platform, tap a button, make their trade and carry on with their day. The more simplified the workflow from a technological viewpoint, the more convenient trading on the go is for our clients,” Stylianou comments.

Nettles remarks that Swissquote also takes innovation very seriously. He says: “We are constantly analysing all financial product trends and pro-actively implement our customers’ needs on our trading platforms.  In 2013, for example, we launched 11 new markets across commodities and NDFs on our FX trading platforms.”

While Spaelti states that some brokers think cleverly about clients, treating them as individuals rather than a mass. “It’s the capacity to take care of clients and to follow up on their specific needs that counts,” he says. “It is very often the small detail or attention a client receives that counts most. This requires an ability to think like the client. In the retail world we face a variety of cultural differences; we employ account officers from all corners of the globe to respond proactively to these individual needs.”

“Surrounding one’s product offering with external providers further increases the client’s fidelity to his broker. Using our opensource gateway, a variety of added value services have mushroomed,” Spaelti concludes.