Albina, how has the year 2021 started for Tools for Brokers and your clients?
Thankfully, it started quite well for us. We always kickstart the year by running a strategy meeting with all our offices and departments, checking where we are on our roadmap, outlining our goals, and defining the intermediate KPIs. Last year was a success for us, and that drive enabled us to start 2021 strong. We just refreshed our website in February, had several product updates throughout Q1, and we continue to work on our ecosystem of solutions. We work hard, so we are luckily in a position where we could keep every member of our team. On top of that, we grew our staff by about 20%, strengthening our regional presence and technical teams. With the vaccination protecting more and more people globally, we hope that the worst is already behind us. We have adapted and learned how to work under strict lockdown conditions, but we are very much looking forward to going ‘back to normal’.
What do you think helped your company successfully go through the last year?
It was a combination of factors. First, we have a clear goal in mind. Every member of the company knows it. So even though the road to this goal had to change last year to fit into the new circumstances, we still knew where we needed to get.
The most significant contribution to the success is our fantastic employees, who have worked together as a tight-knit team during the pandemic. We pay special attention to the hiring process, so our teams consist of goal-oriented individuals who adapt to changes quickly and help and support each other.
Another reason is that trading boomed in 2020. With savings rates going up, no opportunities to spend earned income, and time on their hands, thousands of people started looking into trading. As a result, brokers had more clients, higher volumes, and high volatility. I don’t think many people could have expected that to happen. As a result, last year, we grew in terms of the number of leads, clients, and volumes. Another thing that helped us is that we are a mature company with a developed portfolio of solutions and over a decade of experience. We choose to focus on the strengths that we have and reach the results that we want no matter what.
What are you focusing on currently?
The company’s focus is to develop the bridge to perfection - even though there’s no limit to perfection. We have a very solid base of developments for brokers to ease their daily life. The bridge that covers the essential part of a brokerage company is functional and scalable, but we are aiming beyond that. We want to elevate the level of the whole experience of using such complex software. We are working to make the user experience smooth and pleasant and functionality smart and thought through, saving time and money for companies, and outperforming all expectations.
We continue to expand our teams and regional presence. Our customer base has grown significantly over the past years, and we are making sure that we have enough employees to cover all sales and technical requests that we receive. We are proud of our service levels and are working on maintaining them as the company grows.
From what you have seen in 2020 and 2021, what are the most critical issues that brokers face?
Every brokerage is unique in its success and the difficulties it faces. Yet, it’s safe to say that every broker has been affected by the extreme volatility that we all saw throughout 2020. And while some of the brokers were prepared to face it, others were not so lucky and experienced financial loss. It seems like the constant market volatility will stay with us this year, so we expect that more brokers will be thinking through a plan on how to mitigate possible future risks.
We see a gap in perception between the core issue and the broker’s understanding of what can actually help them. They believe they need an easy solution and an automated system to handle the risks. In reality, though, life is more complicated than that, and there are different multi-step scenarios and several actions that brokers must take to reach their end goal.
What do you think will help them to overcome those issues?
The first step is the acknowledgement that the risk monitoring and risk management systems are needed, and the best of them are more complex than pointing in the direction of the action. We know the possible risks, we know potential outcomes, and we know the actions that we can take to react accordingly to the risk level. Some of the risks might and should be prevented, such as no update of the quotes for longer than 20 seconds. Or huge spikes - it is easier to set the preventative and proactive measures than dealing with the outcome. Of course, we have all that automated thanks to our 11 years of experience.
How can automation help brokers with volatility and their other pressing problems?
There are countless ways automation or any other software product can make brokers’ lives easier and better. With pretty much every risk, there is a way a particular software can reduce it. From automated reporting that makes sure the broker remains compliant to the real-time notifications that enable brokers to react to any events quickly. Before the US election day, for example, we created a whole document with guidelines on configuring the bridge and other solutions to limit the risks. We recommend that every brokerage periodically review its infrastructure and policies to ensure they are safe and protected from the most common scenarios. Today, if a broker is doing something manually, there is an almost 100% guarantee that it can be automated.
Automation can help avoid some of the risks, but not all of them. Do your products offer other solutions for risk management?
Risk management is an ongoing process that every broker thinks about daily. It is definitely one of the most common requests we receive when talking to clients. Every product in the TFB portfolio helps with risk management, but it does it in different ways. We have both proactive and reactive solutions to brokers’ risks. First, help avoid the risk at all or at least mitigate it, whereas the second approach helps minimise the consequences of the risks.
If we look at our Trade Processor solution, most of its functionality directly or indirectly targets broker risks. For example, back up liquidity connection, data savings, monitoring systems to guarantee round-the-clock stable and fast connection, and therefore not having the risk of losing their reputation and, as a result, their clients.
Our BBI product monitors the environment 24/7 and has many alerts with flexible thresholds that brokers can pre-configure and be notified of should something abnormal happen. By the way, this goes both for good and bad abnormalities. We think it is also a risk if a rare event occurs, and the broker misses out on using it to their and their client’s advantage.
Our ecosystem consists of key products, but it also includes many smaller tools that target specific scenarios. We have a Quotes Watcher plugin where a broker can specify the time period in which quotes for each symbol must be updated. And if they are outdated, then trading with these prices is disabled. A lot of the plugins and applications help a broker automate the traders’ monitoring. They do things like protecting traders from a negative balance, help them avoid significant losses during volatility, and track that traders have enough equity.
These are just some examples of how TFB solutions help brokers manage their risks and stay profitable and competitive. We have been operating on the market for a very long time, so by now, we have a solution for the majority of issues that brokerages might run into.
What advice would you give to brokers or entrepreneurs who are just starting their journey this year? What should they be prepared for?
I would give the same advice that I would usually give them. Make sure your solution helps with the real problem of users, not something you think the market might want and need. Always create a top-quality product. Do not underestimate the importance of your team. One might assume that now is a bad time for startups, but in reality, there is never a perfect time to launch something new. We are either in a crisis, in an oversaturated market, or in a pandemic. The truth is, running a company is never easy, but it is always exciting, challenging, and unpredictable.
Also, I would recommend launching sooner rather than later. There are many cases when someone had a great idea and an MVP, but they postponed the launch, trying to improve some things, wait for a better time, or any other reason. And during that time, somebody else was not waiting and launched a similar product. And just like that, they had the first-mover advantage. Getting things done is often better than perfection. Once you are out there, you get your first clients, make your first mistakes, and have the real-life experience. From then on, if you listen to your clients and react quickly, your chances of success will increase.
Ok so what advice would you give to brokers who has been in the market for some time now?
Start with an overview of your current situation. It is crucial to know your strengths and weaknesses. What products or services generate the most volume? Are there any threats, like features that are performing poorly?
Does your company have enough staff in all departments? Are they all trained and up-to-date with your strategy and vision?
I cannot recommend strategy sessions enough. Gather your entire management team, book them for a couple of days, and run brainstorming sessions, Q&A, and general meetings to figure out an action plan. At TFB, we like to come together and discuss how we can reach our goals and what steps we need to take now. Having people from all departments means having different perspectives on the issue. This makes strategy sessions a very creative process, but it needs to be carefully planned and curated to avoid loss of time.
Your company offices are spread across several countries. Do you see any difference in how brokers and traders operate in different locations?
There are cultural differences, of course, which affect how communication is done. In terms of the business processes, I think that no matter where the broker and their clients are based, they still want top-level service, fully functioning technical solutions, quick response and support. Due to differences in laws and regulations, some countries require brokers to run specific reports. So, as an example, for the Japanese market, we have a separate solution for FFAJ (Financial Futures Association of Japan) reports. Similarly, there is a Sharia Account plugin for brokers who work in regions with a Swap-Free Account policy.
If we talk about the bridge specifically, the difference is in the trading assets they want to see and exchanges they are willing to connect to. To reach the best and fastest execution, as well as the best pricing, they want to be connected to the exchanges in their area. Asia is active with crypto trading, Europe looks more into adding equities, and the Middle East is interested in exotic and rare currency pairs. The traders drive the products, but the time pressure is the same everywhere. Everyone is hunting to save milliseconds on the execution.
You have recently launched Weekend FX trading. Do you think that’s a new trend?
Yes, we are very proud to support the Weekend FX by LMAX. Essentially, it enables traders to buy and sell selected currency pairs over the weekend. It is great to see the market shifting towards a truly 24/7 trading schedule. The ability to trade on Saturdays and Sundays has been a long-awaited feature by both brokers and their clients, so we are excited to be a part of this important change. The majority of traders do trading as their side project, and the weekend is the time when they can focus on it, and although there are certain currencies and much lower volumes over the weekend - I think it’s a good first step in this new trend that will be picked up later by many traders.
In your opinion, what will 2021 look like for brokers?
It will be a year of opportunities. We are expecting to see big movers and shakers within the industry. I think that the pace of technology adoption will increase, and the market will become even more transparent and clear for all its participants. The quality will also be on a different level than we used to see. In such an environment, it is better to be up on your feet, looking around and shaping your business in line with trends, market moves, traders’ demands and expectations.
Many new clients have already joined the market, but there is still huge potential with more and more people now seeing their friends and colleagues trading, and they are less hesitant to start. Also, as I said earlier, high volatility will be a regular part of the brokers’ day which means that they need to be even more focused and quick in their reactions to outside events. In general, I believe that more brokers and traders will be joining the market, making it more competitive but also more mature.
There is also an ongoing trend of expanding regulation. If we look at the US and what the retail traders were doing over the last several months, there are signs that the US government will implement new rules and laws to regulate situations that were simply not happening before. Financial authorities in many countries are working on new standards to protect all parties and make markets safer and more transparent. We see it as a good thing because, with more regulations, there is more clarity, which inevitably helps the industry grow.