Forex Magnates reached out to Matt Donofrio, FX and CFDs Sales Director at Tradeview Ltd, for an exclusive perspective on Liquidity provisions and constraints that are facing forex brokers both globally and in North America.
Tradeview Ltd is an internationally recognized brokerage firm - the company has seen its volumes and personnel swell in 2014, culminating in the opening of several new offices. Mr. Donofrio has garnered extensive experience in the forex realm, having worked with Tradeview since 2007 where he started as the VP of Institutional Sales. Prior to joining Tradeview, he also served in several senior executive roles at Rosenthal Collins Group, TalkPoint Communications, and Adforce. His interview can be read in full below.
1. What sorts of challenges do you face regarding liquidity provisions for brokers?
The biggest challenge is identifying potential clients and establishing the initial relationship. There’s certainly a good amount of competition, so our job is to communicate our differentiators and how we can add value to their current offering. When talking to a potential client, we try to be as honest as possible in terms of what we can offer and how it can improve their business. The sales process for this type of client is typically longer than a traditional retail customer. A level of trust needs to be established before you can begin working together.
2. Can you explain some common themes exhibited by smaller forex brokers through your work with clients?
Most smaller/newer brokers I come across started out as either an IB or WL. And now because of the lower cost of entry with all the MT4 leasing companies, they have decided they can make more money as a stand-alone shop. The issue is that they don’t always understand every aspect that goes into running a professional brokerage, such as: license requirements in their jurisdiction, responsibility of holding client funds, processing transaction fees, monitoring exposure with LPs, having 24 hour support, and being responsible for every trade their clients make.
As a result, Tradeview has acted not only as a liquidity provider to our clients, but also as a business consultant. A value we offer clients is providing the knowledge we have gained over many years of experience. We can show them the potential pitfalls and mistakes before they happen. Tell them what does and doesn’t work, and establish more of a long-term partnership, as opposed to just a client/broker relationship.
3. Has the shifting regulatory climate in regions such as North America necessitated a different approach for liquidity providers?
For us, North America is a dead territory. The space is now dominated by just a few players, and obviously the current regulatory environment in the US and Canada is very restrictive in terms of doing business. We decided several years ago to focus all our efforts on business in Europe, South America and Asia, removing North America from the equation. Currently, I work with several brokerages across the world, each in a jurisdiction with varying degrees of regulation. Up until now, with our current license and registration, there aren’t really many places we can’t do business, other than a handful of black listed countries.
4. Where is the largest area of growth seen in the forex industry, or are traditional locales such as London saturated with a conflux of small-scale brokerages?
I see opportunities for growth everywhere. As a liquidity provider, I see those markets saturated with smaller brokers as a huge opportunity. Typically these smaller brokers are starting out with few resources and little capital, prohibiting them from establishing their own direct prime broker relationship. In order to be able to operate, they are going to need somewhere to offset risk or pass trades through. With the rise of third party technology vendors providing more robust bridges and white labels, along with Metatrader gateway, connecting to other brokers has become more cost effective.
There’s also tremendous growth in less developed markets. There we have the ability to really help white label partners grow their business and become successful. We are always looking for the top talent in every country to provide our support and resources to ensure their success.
5. How does Tradeview maintain a competitive edge amidst a pantheon of other white label or liquidity providers?
Obviously first and foremost, the two most important things are pricing and execution. Without reliable prices and quality execution, it is difficult to even begin to compete. I feel execution is the more critical of the two, getting in at the price you want, and more importantly, getting out at the price you want.
Additionally, we try to develop products that differentiate ourselves from our competitors. We have partnered with the top technology providers in the industry to develop a FIX API solution that connects directly to an MT4 account. Clients can connect to our deep liquidity pool via FIX API, but still be able to monitor the account’s positions through the familiar MetaTrader 4 platform. This is the best of both worlds. Having the ability to offset trade flow with the API, but also be able to utilize the most popular and familiar retail Trading Platform .
