This article was written by Ivan Egorov, Global Head of Sales at Tools for Brokers
The success of modern brokerages consists of many elements, yet there is nothing that has such a direct impact on whether the brokerage will grow or not as the technology they choose.
To maintain powerful performance and meet clients’ demands, brokers employ the newest hardware and the most robust software that naturally includes a liquidity bridge. Once selected and installed, the bridge becomes the heart and soul of the enterprise. And because it is so deeply integrated into many processes in the brokerage, even the thought of switching to something else seems painful. However, change is inevitable, especially in the finance industry, for securing a position at the top of the broker food chain.
Today, we will discuss the key benefits of making a proactive move, why some hesitate to change, and the implications of sticking with how things are. You can also listen to the full recording of a TFB webinar where these topics were unpacked in more detail.
Why we are opposed to change in our brokerages (and life in general)
When it comes to changing something, the natural initial reaction is to resist any movement and stick with the status quo. Change always creates disruption. And while it mainly results in a positive outcome, there is always the risk of something not going according to plan and causing damage.
And when you are making a significant change, such as migrating to a new liquidity bridge for your company, the implications of the change are tremendous.
What we tell ourselves in order not to change: top objections
Migration is a tricky but sometimes necessary process. And there are many things we are ready to tell ourselves to avoid making the change.
Here are the top reasons NOT to change your bridge:
#1 I am happy with my current provider
Perhaps the number one thing we tell ourselves is that everything works fine as it is, so there is no real need for new software or whatever else we are considering replacing. However, if we think about it, we usually find something that is bothering us, such as:
● The high price
● Poor technical support
● Service downtime
● Missing functionality
● Tricky user interface
We often get so used to these issues that we don’t even notice until they become a problem. For example, some brokers aren’t aware that you can avoid financial loss caused by discrepancies between liquidity providers due to the best price aggregation and extra costs on swaps that follow them.
#2 I do not have access to or control over the servers and bridge infrastructure
Many brokers end up in situations where the bridge provider is in complete control over the entire infrastructure and setup, so every minor tweak to the solution has to be formally requested and approved.
If you find yourself in a situation where a vital component of your business is under someone else’s control, this begs the question of how secure this is for the brokerage in the long term and how much longer you are willing to put up with it. TFB clients don’t have to deal with such issues because they are provided with private servers and have full control of their bridge and trading environment.
#3 We are too deeply integrated to change anything now
When you have a fully functioning brokerage with many clients, changing to a new solution can create complications for existing traders. For example, Prime Brokers traditionally need to ask their FIX API clients to develop new connections to the new bridge. However, many preconceptions about specific processes are outdated, and the process changes with technological progress. If we take Trade Processor, as an example, it allows brokers to emulate the same FIX API connectors they had before.
The benefits of moving to new technology for brokers
Finally, let’s cover the most significant benefits of switching to new, modern liquidity bridges that legacy solutions are unable to provide:
Speed of execution
Speed is a crucial factor in wowing and keeping traders loyal, so it should not be underestimated. It can be achieved in many ways. In Trade Processor, high speed is powered, among other things, by the decentralised architecture. It means that you connect your trading platform directly to your chosen Liquidity Provider and save time.
Pro tip: Trade Processor allows you to execute orders for 1-2 ms (according to actual test results). However, please note that the speed of execution depends on many factors, such as the distance to the LP, hardware, and connection speed.
Unlimited number of connectors
Unlike legacy systems, modern bridge providers rarely have limits on the number of connectors (makers/takers) that brokers can make. Being limited like that creates inconvenience, risk, and loss of potential profits for brokers; that’s why we don’t pose a limitation like that or charge our clients extra. They can connect to as many trading platforms, LPs, and takers/makers as they need and remain completely flexible.
A supportive ecosystem of solutions
Besides having fewer limits, modern technology offers the benefit of extensive additional tools and products that further enhance the primary solution that brokers are seeking. As an example, the TFB ecosystem includes, in addition to the liquidity bridge, PAMM money management software, a copy trading solution, risk management tools, such as Dynamic Leverage or Swap Free solution, and many other plugins to maximise the efficiency of their trading platforms. Together, these solutions create a comprehensive infrastructure that supports and enhances brokers’ operations.
Migration to new liquidity bridge: a TFB example
If you move to Trade Processor as your new liquidity bridge, you get full end-to-end support from the Tools for Brokers tech team. The migration usually takes 3-4 weeks, but can be done faster.
Most of the work is done by TFB’s engineers, and there are three key steps:
- Engineers analyse all the aspects of the setup and prepare a detailed migration plan.
- Run a test migration to ensure it performs as expected.
- Run the actual migration to the bridge.
And as we mentioned earlier, Trade Processor can emulate the existing client connections, so only minor adjustment is required on brokers’ and their clients’ ends.
Final thoughts
Changing essential components of a brokerage’s environment may seem daunting. Still, it can be a seamless and even stress-free experience if you have a reliable partner to assist you. The risk of using outdated, weak technology is far too high. Clients are demanding, and they will not be willing to tolerate poor performance and miss profit opportunities. That’s why it’s necessary to consider upgrades to new solutions to see what else is out there and what functionality you might be missing that could take your company to the top.
