What factors are likely to influence whether an institution chooses to build or buy-in the expertise required to develop and deploy an online FX trading platform geared towards Retail FX operations?
It depends very much on the institution in question. The major banks for example, have often found that size and resources do not necessarily equate to expertise in a particular field. Several banks have ended up taking third party technology simply because they do not have the required resources to produce something within what is effectively a niche technology space. Time to market is another factor; to develop a full, front to back-end system can take several years, even if you have the relevant know-how. Finally, I would say a lot depends on intellectual ownership of the technology, along with independence; so many platforms are extremely similar and easily recognizable, the only way to really stand out is to create your own GUI skin from scratch as we do each time at CFH.
What steps can new Retail FX sell side firms take, to gain access to interbank liquidity from the top FX banks?
Obviously the best way to access this level of liquidity is to go direct to the banks themselves. But we all know that is has become tougher to get and it requires a lot of resources and patience more than anything, along with a significant balance sheet if you want to deal with the tier 1 banks.
So the optimal and most efficient route is to choose a broker who will give them access to clean interbank liquidity, one that doesn’t run any kind of internal risk; that will immediately put them at a disadvantage and affect their clients’ trading experience, more often than not in a negative way. We have already seen a growing number of second tier providers offering STP solutions (some more STP than others, it has to be said), and we believe this trend will continue.
In what ways can CFH Markets help firms to build a presence and quickly establish a brand in markets they wish to target?
Being highly focused on technology, as well as being able to offer access to interbank liquidity, we can allow a firm to be up and running as a fully operational, independent entity within 4-6 weeks. Our technology is extremely flexible, allowing us to brand our platforms in any way the client wishes. We provide them with technology that allows for fully automated client on boarding; from the demo registration process, to CRM integration, to converting client accounts to live. But above all we have people with know-how and expertise that you don’t find anywhere else in the industry and in the end it is a peoples industry more than anything.
How far throughout the Retail FX business value chain can CFH Markets assist firms to minimize risk, maximize profits and overcome operational hurdles?
We are one of extremely few firms globally, who can offer them the entire value chain, all in a one stop shop and all hosted by us, along with 24 hour support. The tools we provide firms with allow them to automate more or less every aspect of the business. In terms of maximising profit, we give them 100% control over the levels of commission and spreads they wish to apply and we give them access to unrivalled interbank liquidity. In terms of operational hurdles, they are provided with a sophisticated yet intuitive administration tool which lets them create and modify client accounts on the fly, and they can view their internal and external risk in real time.
What lessons can new entrants to Retail FX learn from successful sell-side players who have utilized the industry knowledge and insights provided by leading specialist consultants like CFH Markets?
The most important lesson is that no two companies are the same; there is no set formula that works for everybody across regions and regulatory frameworks. That is why it is more important than ever to work with the right people that care about the client without any conflicts of interest. With CFH they get access to unique global know-how and infrastructure that allows them to become leaders in their space with a setup that has been tailor-made to their specific needs and requirements.