Paul Jackson Global Head of Sales, CFH Clearing
Paul Jackson Global Head of Sales, CFH Clearing

CFH: A responsible approach to Risk Management

Paul Jackson, Global Head of Sales, CFH Clearing answers our questions about recent changes in brokers’ attitudes, particularly towards risk management. He explains how CFH has responded to market changes in order to provide institutional clients worldwide with an unparalleled end-to-end trading solution and award winning liquidity.

In which areas is CFH seeing the biggest shift in attitude from brokers?

We have noticed a general change in attitude in three specific areas – all three of which have contributed to CFH’s recent growth. Firstly, risk management tools and a robust infrastructure have become more of a priority than ever before. 

Secondly, brokers and banks across the globe are increasingly realising the importance of partnering with established, regulated and reputable Liquidity Providers. 

Thirdly, as traders become more astute and market savvy - largely due to technical advances, accessibility to algorithmic trading and a wider range of information services – brokers and banks are seeking more sophisticated tools to help them to accommodate more challenging types of clients and flows. 

In particular, they are increasingly interested in tools to help them to analyse trading patterns and access business intelligence as well as opportunities to diversify their portfolios.

Do you think brokers now see the value in investing in risk management tools?

Since the SNB events last year, risk management has become high on the agenda for brokers worldwide. It took an event with such serious repercussions to really make risk management a priority. This has since been compounded by changes in regulation, capital requirements and leverage in markets such as Turkey which have steered brokers to be more progressive with their risk management and hedging strategies. 

There has definitely been a major shift in attitudes and brokers can really see the value of investing in their infrastructure and trading software to help them to manage their exposure more effectively and remain profitable, particularly during periods of high volatility. 

How can CFH help brokers in terms of risk management tools?

We have developed impressive software called ClearRisk, part of our ClearVision suite of products, which provides brokers with one dashboard enabling them to monitor and hedge trade exposure.  

Using ClearRisk, brokers can manage their portfolio far more effectively than ever before, run reports to analyse client behaviour and use this insight to plan strategies to minimise risk. Our clients realise that having the right approach to mitigating risk can create opportunities for them to grow.

ClearRisk is available to clients who use our complete portfolio of ClearVision trading tools and is also available as a separate module for those who are seeking a risk management product to enhance their existing product portfolio.

What is CFH’s approach to risk management during volatile periods in the markets?

As a Liquidity Provider, it is our priority to reduce clients’ exposure to risk. As part of CFH’s risk management strategy around the Brexit period, we didn’t increase margins to a level which made trading prohibitive. However, we increased margins to a certain extent to protect our broker partners and ourselves. We struck a level which was acceptable to brokers and they responded well – in fact, we saw heightened volumes immediately before and after Brexit, with significant increase in volumes between June and July.

We have strong communications with our clients and keep them informed about the decisions we make so that they understand the position we take and why. This informed and transparent approach has helped us to grow a loyal client-base, even during challenging times.

How important is trading infrastructure as part of a risk management strategy?

It is critical. In addition to a solid risk management solution, a brokerage needs support from a robust infrastructure to manage heightened volumes with little or zero downtime. Before, during and immediately after the Brexit vote, CFH Clearing saw good fill rates at a time when there was a shortage of liquidity in the market and our clients managed to execute trades with little slippage and rejection. This can largely be attributed to our investment in building a resilient infrastructure and network. With our aggregated liquidity and CFH Liquidity pool, we saw strong pricing from our banks which was really beneficial to our clients during heightened volumes and a surge in volatility.

CFH Clearing: Fact File

Founded:  2008 – part of the CFH Group which also includes CFH Systems and Tradimo

Business: World-leading STP brokerage providing institutional clients with multi-asset execution, Prime Brokerage services and trading technology.

Key attributes: Strong investment in technology and infrastructure. Excellent relationships with Tier1 banks. In-depth understanding and local knowledge of all key territories in the retail FX industry. Strong focus on customer service.

Client base: Over 400 small and medium-sized institutional clients and broker partners worldwide. Our clients serve thousands of customers in over 80 countries.

Regulation: (FCA) Financial Conduct Authority, reg. no. 481853

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