Over the past 5 years I have dedicated a good amount of my time and focus to designing, developing and delivering software solutions for the Retail Forex market, which has experienced a period of rapid expansion and change. This growth has not only come in trading volumes, but also in the sheer number of brokers, traders and technology firms engaged directly in the FX space.
This demanding environment has taught me a lot about managing and identifying common technology trends, challenges and opportunities that exist across a broad range of clients in a global marketplace.
There are certain steadfast criteria for success, such as stability and performance, that exist acrossthe financial technology space for any asset class.. Other opportunitiesfor technological innovation come as a specific market sector matures and evolves. The FX space in particular presents unique challenges that are just now coming to the forefront of relevance in terms of technological architecture.
In this post, and as a regular contributor to Forex Magnates – Experts, I hope to try to shed light on the unique challenges presented to FX Technology providers, and the creative solutions that have come about as a result.
As industry “volumes” (again, both trading volumes and the volume of broker participants) begin to grow less exponentially, and more linearly, firms are being challenged to find better ways to engage clients, capture consistent profits and measure success in terms of a technological endeavor. “Flavor of the week” ventures into unknown and unproven technologies, market niches and architectural consolidation projects have proven to provide more burn than return for a large majority of brokers.
Many tech companies have come and gone in the last 5 years... some lacking the technical savvy or market knowledge to engage the space, others just unable to keep up with the demanding 24/5 pace and inexplicably short Saturday maintenance window. This leaves us at a point in time where both new brokers, and the emerging “success stories” in terms of eFX trading are equipped with knowledge and experience which allow them to make smarter decisions in terms of technology, both from the standpoint of the brokers themselves and 3rd party technology providers.
Though there are many, many decisions that go into evaluating a technological deployment, Ibelieve it can be boiled downtothree major questionswhich I feel a broker needs to ask themselves when evaluating a technological parlay within the FX market. I have outlined each of these questions below.
Where is the industry heading from the standpoint of the technology I’m looking to deploy?
The industry is moving towards a generation of new providers, and increased customization and collaboration through Open APIs. There will be a trend towards in-house deployment of technologies previously considered to be enterprise-onlyaccessible solutions or custom developed products. It is only a matter of time until providers emerge with scalable, deployable solutions for off-the-shelf, in house customization of OMS, Trading Platform
Trading Platform
In the FX space, a currency trading platform is a software provided by brokers to their respective client base, garnering access as traders in the broader market. Most commonly, this reflects an online interface or mobile app, complete with tools for order processing.Every broker needs one or more trading platforms to accommodate the needs of different clients. Being the backbone of the company’s offering, a trading platform provides clients with quotes, a selection of instruments to trade, real
In the FX space, a currency trading platform is a software provided by brokers to their respective client base, garnering access as traders in the broader market. Most commonly, this reflects an online interface or mobile app, complete with tools for order processing.Every broker needs one or more trading platforms to accommodate the needs of different clients. Being the backbone of the company’s offering, a trading platform provides clients with quotes, a selection of instruments to trade, real
Read this Term and Liquidity
Liquidity
The term liquidity refers to the process, speed, and ease of which a given asset or security can be converted into cash. Notably, liquidity surmises a retention in market price, with the most liquid assets representing cash.The most liquid asset of all is cash itself.· In economics, liquidity is defined by how efficiently and quickly an asset can be converted into usable cash without materially affecting its market price. · Nothing is more liquid than cash, while other assets represent
The term liquidity refers to the process, speed, and ease of which a given asset or security can be converted into cash. Notably, liquidity surmises a retention in market price, with the most liquid assets representing cash.The most liquid asset of all is cash itself.· In economics, liquidity is defined by how efficiently and quickly an asset can be converted into usable cash without materially affecting its market price. · Nothing is more liquid than cash, while other assets represent
Read this Term management solutions which can be internally run, customized and maintained by small / medium sized brokers.
Is this something I can just develop myself with outsourced programmers?
If there’s one thing I’ve heard too many times in this space it’s that a specific solution is “simple”. I still hear it every day: “Can we add XYZ to my platform?It’s a simple change.”. Any time a broker brings such a solution to our team, the general first response is “I understand how this works in a simple predictable market. Now how does this work, remain stable, and react to the Bank of Japan intervening on the Yen and moving the market by 200 pips?”
It’s this type of edge-case thinking and approach that must be used by successful brokers and tech providers to both limit scope creep, and provide a gauge for the capabilities of delivering a solution that works 24/5, under any market condition. This is a rare ability and not something to be taken lightly, as has been shown time and time again.
How do I choose a technology partner?
Technology companies, specifically within the Forex industry, come in many different flavors. There are technology firms who are great at developing custom products. There are other firms with a solid flagship offering, with little compromise for customization.
There are firms who exist only within a specific niche (Binary Options platforms, for instance). The key to finding the right partner is understanding your needs. Don’t re-invent the wheel. Be skeptical of pricing that is too far below the industry expected norms.
Decide early on whether or not you have the risk appetite to be the guinea pig on a new technology, in exchange for flexibility in features or pricing, in comparison to working with a more proven solution. Ask around. Even your competitors, more often than not, are willing to share war stories on outsourced firms over a pint.
Conclusion:
I hope to continue to be able to share valuable insights into the life of a pure technology player in the FX Retail space. Please stay tuned to this blog for a delicate combination of broker / technology provider relationship insight, the occasional techno babble, and (if anything) a source of more pertinent questions for you to ask yourself and your partners as you continue to grow your FX venture.
Over the past 5 years I have dedicated a good amount of my time and focus to designing, developing and delivering software solutions for the Retail Forex market, which has experienced a period of rapid expansion and change. This growth has not only come in trading volumes, but also in the sheer number of brokers, traders and technology firms engaged directly in the FX space.
This demanding environment has taught me a lot about managing and identifying common technology trends, challenges and opportunities that exist across a broad range of clients in a global marketplace.
There are certain steadfast criteria for success, such as stability and performance, that exist acrossthe financial technology space for any asset class.. Other opportunitiesfor technological innovation come as a specific market sector matures and evolves. The FX space in particular presents unique challenges that are just now coming to the forefront of relevance in terms of technological architecture.
In this post, and as a regular contributor to Forex Magnates – Experts, I hope to try to shed light on the unique challenges presented to FX Technology providers, and the creative solutions that have come about as a result.
As industry “volumes” (again, both trading volumes and the volume of broker participants) begin to grow less exponentially, and more linearly, firms are being challenged to find better ways to engage clients, capture consistent profits and measure success in terms of a technological endeavor. “Flavor of the week” ventures into unknown and unproven technologies, market niches and architectural consolidation projects have proven to provide more burn than return for a large majority of brokers.
Many tech companies have come and gone in the last 5 years... some lacking the technical savvy or market knowledge to engage the space, others just unable to keep up with the demanding 24/5 pace and inexplicably short Saturday maintenance window. This leaves us at a point in time where both new brokers, and the emerging “success stories” in terms of eFX trading are equipped with knowledge and experience which allow them to make smarter decisions in terms of technology, both from the standpoint of the brokers themselves and 3rd party technology providers.
Though there are many, many decisions that go into evaluating a technological deployment, Ibelieve it can be boiled downtothree major questionswhich I feel a broker needs to ask themselves when evaluating a technological parlay within the FX market. I have outlined each of these questions below.
Where is the industry heading from the standpoint of the technology I’m looking to deploy?
The industry is moving towards a generation of new providers, and increased customization and collaboration through Open APIs. There will be a trend towards in-house deployment of technologies previously considered to be enterprise-onlyaccessible solutions or custom developed products. It is only a matter of time until providers emerge with scalable, deployable solutions for off-the-shelf, in house customization of OMS, Trading Platform
Trading Platform
In the FX space, a currency trading platform is a software provided by brokers to their respective client base, garnering access as traders in the broader market. Most commonly, this reflects an online interface or mobile app, complete with tools for order processing.Every broker needs one or more trading platforms to accommodate the needs of different clients. Being the backbone of the company’s offering, a trading platform provides clients with quotes, a selection of instruments to trade, real
In the FX space, a currency trading platform is a software provided by brokers to their respective client base, garnering access as traders in the broader market. Most commonly, this reflects an online interface or mobile app, complete with tools for order processing.Every broker needs one or more trading platforms to accommodate the needs of different clients. Being the backbone of the company’s offering, a trading platform provides clients with quotes, a selection of instruments to trade, real
Read this Term and Liquidity
Liquidity
The term liquidity refers to the process, speed, and ease of which a given asset or security can be converted into cash. Notably, liquidity surmises a retention in market price, with the most liquid assets representing cash.The most liquid asset of all is cash itself.· In economics, liquidity is defined by how efficiently and quickly an asset can be converted into usable cash without materially affecting its market price. · Nothing is more liquid than cash, while other assets represent
The term liquidity refers to the process, speed, and ease of which a given asset or security can be converted into cash. Notably, liquidity surmises a retention in market price, with the most liquid assets representing cash.The most liquid asset of all is cash itself.· In economics, liquidity is defined by how efficiently and quickly an asset can be converted into usable cash without materially affecting its market price. · Nothing is more liquid than cash, while other assets represent
Read this Term management solutions which can be internally run, customized and maintained by small / medium sized brokers.
Is this something I can just develop myself with outsourced programmers?
If there’s one thing I’ve heard too many times in this space it’s that a specific solution is “simple”. I still hear it every day: “Can we add XYZ to my platform?It’s a simple change.”. Any time a broker brings such a solution to our team, the general first response is “I understand how this works in a simple predictable market. Now how does this work, remain stable, and react to the Bank of Japan intervening on the Yen and moving the market by 200 pips?”
It’s this type of edge-case thinking and approach that must be used by successful brokers and tech providers to both limit scope creep, and provide a gauge for the capabilities of delivering a solution that works 24/5, under any market condition. This is a rare ability and not something to be taken lightly, as has been shown time and time again.
How do I choose a technology partner?
Technology companies, specifically within the Forex industry, come in many different flavors. There are technology firms who are great at developing custom products. There are other firms with a solid flagship offering, with little compromise for customization.
There are firms who exist only within a specific niche (Binary Options platforms, for instance). The key to finding the right partner is understanding your needs. Don’t re-invent the wheel. Be skeptical of pricing that is too far below the industry expected norms.
Decide early on whether or not you have the risk appetite to be the guinea pig on a new technology, in exchange for flexibility in features or pricing, in comparison to working with a more proven solution. Ask around. Even your competitors, more often than not, are willing to share war stories on outsourced firms over a pint.
Conclusion:
I hope to continue to be able to share valuable insights into the life of a pure technology player in the FX Retail space. Please stay tuned to this blog for a delicate combination of broker / technology provider relationship insight, the occasional techno babble, and (if anything) a source of more pertinent questions for you to ask yourself and your partners as you continue to grow your FX venture.
