Post-COVID, Liquidity Bridging Is More Important Than Ever: Tools for Brokers

A lot has changed over the course of the past twelve months. In addition to the ways that our daily lives have been affected by COVID-19, the financial world has seen many changes.

For forex, COVID has rung in a new era of activity. Like many other aspects of the financial world, trading has seen a resurgence in activities. Waves of new traders came into the space this year. As a result, business is booming and brokers have to keep up with the competition.

Finance Magnates recently spoke with Albina Zhdanova, Chief Operating Officer at Tools For Brokers, about changes in the forex industry over the past year, as well as how ToolsForBrokers leading Liquidity bridging solution is helping brokers play at the top of their game.

This is an excerpt that has been edited for clarity and length. To hear Finance Magnates’ full webinar with Tools For Brokers COO Albina Zhdanova, visit us on SoundCloud or Youtube. To learn more about Tools For Brokers’ liquidity bridging solution, known as Trade Processor, click here. This is a sponsored piece.

The Forex Industry Is Constantly Changing, but It's Not Going Anywhere Anytime Soon

“The important thing that we can do to look into the future is to understand the past,” Albina said. “The undeniable trends that we have seen in the past is that everyone is moving toward regulation; all countries are gradually coming to that point.”

“We also see that the traders themselves are improving their trading strategies a lot. They are trading a lot using APIs and automated systems that do fundamental analysis. I’ve seen many traders develop an approach to diversify their investment portfolios to invest in the future and have the forex market as one part of their whole system.”

“In terms of the short-term view of incomes and returns versus long-term plans, there are many things that have changed economy-wise,” Albina explained.

She recalled “one of the first things” that she heard at a conference when she joined the forex industry a number of years ago: “I heard that this industry was going to die within the next year, or just fade away soon,” she said. “I’m sure that there are still people who are saying this now.”

Could there be any truth to this? Albina does not think so. “It’s not gonna die,” she said. “It is a young industry, but we need to remember that this is an important pillar of the world’s financial system. It’s not going to disappear.”

Still, because the industry is so young, it is constantly changing. As such, “to be able to catch what’s going to happen, I think that instead of ‘counting down our days’, people and companies should embrace the fact that the industry is a changing, living organism,” and adapt quickly.

Brokers Need to Be Ready to Meet Trader Demand for New Assets with Liquidity

What kinds of changes do industry participants need to adapt to? “Many remember the binary options trend that was a quick up-and-down because it was banned everywhere; everyone thought that the same was going to happen to the cryptocurrency trend that happened after that,” she said.

Of course, “that didn’t really happen. It wasn’t the same situation, and crypto is still there.” In fact, “we see a lot of institutional clients investing in crypto as a method of capital preservation because the whole economic situation is very uncertain.”

Still, “we can’t really predict what will happen in the future, but what we have to do is to preserve and prepare the skills and qualities in our companies to be ready for anytime that the future has for us.”

“In the last two years, we’ve seen more demand for alternative assets,” Albina continued, specifically referencing “FX, CFDs, Cryptocurrencies , equities, options and metals.”

Therefore, companies need to be ready to adapt to customer demand: for example, “the ability to add these new assets, whatever they will be, should be adopted very quickly,” Albina said. Additionally, companies should be ready to go above and beyond the competition: “we recently added weekend FX trading because we know that it’s not offered by many banks or institutions,” she added.

However, Albina believes that weekend trading, and an overall drive toward flexibility in markets, is the way of the future. “This is what’s going to happen,” she said. “I think part of that was influenced by crypto trading because you can trade crypto 24/7. FX and other types of trading will slowly move toward 24/7 trading as well.”

In addition to taking an adaptive approach toward growth, Albina recommends that companies need to partner with firms that have a “startup mindset.” In other words, these partner firms should share this adaptive approach.

“They must be able to change things quickly, to implement new functionalities, to quickly adapt new things from regulators and traders and from the risk management team as well,” she said.

What Are the Main Obstacles That Retail Brokers Are Currently Facing?

However, in order to be able to adapt quickly, trading firms must be equipped with the proper technology.

Indeed, Albina explained that one of the biggest obstacles that companies face is “trying to use old tricks in a new environment.”

“The complaints that the forex industry is ‘going to die’ are often coming from people who believe that traditional practices are not going to work, which is why change is so important,” Albina said.

While firms that have been operating in the forex industry for a longer time have the wisdom of experience, they may not always be in touch with the cutting-edge trading technology that is available for brokers today.

If you are still clinging to the old, “there are clear signals that are telling you that the time has come to make changes,” Albina said.

What are these signals? “The reason that we decided to build the liquidity bridge in the first place is that when we have shared our knowledge with our clients, we noticed that there are so many simple small things that can be sorted and wouldn’t have caused big issues that happened because they weren’t addressed.”

Albina said that: “we aimed to sort the reason of the issues that were happening.”

This is what led to the creation of Tools For Brokers’ liquidity bridge, known as Trade Processor. “We just decided to do the whole thing by ourselves because we know how to avoid these major issues from the beginning,” she said.

“It’s Important to Evaluate Your Business and the Partnerships That You Have Right Now and to See If Now Maybe Is the Time to Make Changes.”

What kinds of issues does the liquidity bridge help to address?

Albina said that the most common issue is time-to-market: when “the partners that you’ve chosen, or your internal development team, is holding you back from launching your new product.”

“It might not seem like a big issue, because your product will get launched eventually,” Albina said. “But, if you think of the fact that somebody else may have launched their product before you, or that someone else doesn’t have problems that prevent them from launching, this is the cost of launching later.”

Beyond delays in time-to-market, “another big thing we see is technical support,” Albina said. “With trading technology, there is always something happening, and if you want to know the answer about why this happens and what the logic was,” you need support.

Albina clarified that she “wasn’t referring to software bugs, because all liquidity bridge providers have very good systems.”

However, “when you want to understand how things work, and it takes you a full week of pinging them just to understand what is happening, I think this is part of what’s holding brokers in the past.”

“It’s important to evaluate your business and the partnerships that you have right now, and to see if now maybe is the time to make changes.”

Tools for Brokers' Liquidity Solution Enables Brokers to Be Ready for Anything.

How can Tools For Broker’s liquidity bridging solution help brokers?

“We have decided to take a completely different approach with an independent system at the center of it,” Albina said. “This creates a private aggregation pool for each broker.”

“This provides a lot of benefits for your company,” Albina explained. “It means that you still have the opportunity to connect with over 50 liquidity providers and exchanges that we have right now, and the connection will happen directly to your pool – you are not sharing the connection with others.”

“Another part is that we’ve built the aggregation system using modular code,” Albina explained. “What this means in ‘plain English’ is that the code can be easily modified based on the clients’ desires. If you want to change one function, it will not influence the other parts.”

This allows Tools For Brokers to create customized products quickly and efficiently. “We can launch new versions of the product every few months with new features,” she said. “This might be based on regulations, new types of assets, new connections, new formulas, new filtration rules, anything.”

“Because this is a private, independent system, it can also be used on the weekend,” Albina added. “If you are part of a centralized system, you are not able to control it. If it is off on the weekend, it is off for everyone; if it is failing, it is failing for everyone.”

However, “if it is your private system,” there is much more flexibility. “If you want it to work on the weekend, it will work on the weekend. If you want to update it, you do that within your functionality. If someone’s system is down, your system is unaffected.”