Nicholas Pratt
Nicholas Pratt

MT4 Liquidity Bridges - powerful new business engines for Retail FX

As Retail FX brokers look to adapt their trading platforms to cater for the increasingly popular ECN market, MT4 Liquidity Bridging applications are certain to play an important role. Nicholas Pratt looks at the challenges that lie ahead for the application developers.

First Published: e-Forex Magazine 45 / Retail e-FX Provider / October, 2011

The role of the Retail FX broker has often been likened to that of a bookmaker. The broker will accept a trade on behalf of a retail client and then place it onto their platform which is plugged into the interbank market. The broker is effectively acting as both market maker and dealer, making a margin on each trade. As retail traders have grown in sophistication, especially those small hedge funds still categorised as retail traders, the suspicion that their brokers are taking advantage of them through unscrupulous practices such as skewing prices and front-running has caused increasing irritation.  To try and placate this irritation, retail traders have been offered a type of ECN trading where there is greater straight-through-processing and a more direct route to the interbank market where the broker simply takes a flat rate commission on each trade. It is not ECN trading akin to the likes of Currenex or HotSpot that are used for institutional buy-side firms trading more than $10m but it is a...continued

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