oneZero Financial's Ecosystem Model and the Disruption of FX Connectivity

In January, 2016, approximately one year after the SNB event, oneZero launched its Margin Hub product. This new module, paired with oneZero’s previously announced aggregation and back-office capabilities, shifted oneZero’s position in the marketplace from their traditional role as a leading MT4 Bridge Bridge The bridge or liquidity bridge is an essential component for brokers that are enabling their clients to trade at interbank rates directly via a Prime Broker or a Prime-of-Prime (PoP). While market makers do not require a bridge in order to service their clients, brokers which are sending through orders to a liquidity provider or an electronic execution venue need a bridge to connect their trading platform to the interbank market.Bridges are used extensively in forex trading, specifically for Met The bridge or liquidity bridge is an essential component for brokers that are enabling their clients to trade at interbank rates directly via a Prime Broker or a Prime-of-Prime (PoP). While market makers do not require a bridge in order to service their clients, brokers which are sending through orders to a liquidity provider or an electronic execution venue need a bridge to connect their trading platform to the interbank market.Bridges are used extensively in forex trading, specifically for Met Read this Term solution to a technology provider capable of addressing the needs of institutional brokers (namely, prime of primes).

Since the release of the Margin Hub in January, oneZero’s CEO Andrew Ralich explained that there has been a very exciting response to the firm’s Margin Hub for institutional 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 distribution.

“We’ve seen both existing clients, and new clients, engage us with excitement around addressing what they see as a significant gap in credit and clearing facilities following the SNB event,” he explained.

As a result of this, oneZero is now taking its product line a step further in their disruptive approach to connectivity within the FX space. With the coming shift in the market, oneZero has been adaptive to integrate its existing line of products into a broader ecosystem offering.

The CEO of the company continued: “What we’re now seeing is a number of cases where our traditional Bridging clients are looking to connect to liquidity coming from our Institutional Hub partners. The result is a solution where brokers access new lines of credit on a framework that is extremely easy to on-board from a technology standpoint.”

“As a result of these efficiencies, we’re now able to take an approach that passes the savings of these oneZero-to-oneZero connections directly to our clients. Therefore, we are now offering to any oneZero Bridge client the ability to offset STP risk to a oneZero Margin Hub broker at $1/million (in technology fees),” Ralich explained.

Integrating a Multitude of Layers into a Single Offering

The 'ecosystem' model being offered by oneZero is not new to the FX space. Institutional aggregation providers such as Currenex, Integral and FlexTrade, for example, have offered 'interconnectivity' within their platforms for years. What is novel to oneZero’s approach is that, for the first time, this type of unrestricted ecosystem discount now extends all the way down to retail brokers offering the MT4 platform.

Andrew Ralich has previously highlighted that MT4 bridging is a technology component that legacy connectivity providers have struggled with for years. Following the release of oneZero’s Hub components, these providers will now be contending with both feature parity pressure and increased pricing pressure within the retail brokerage space.

As brokers are looking to cut costs wherever possible, the increasingly competitive landscape of retail connectivity will now be even more challenging for providers who are incapable of servicing the entire connectivity vertical.

The cost implications of this approach for retail brokers and prime of prime brokers are potentially considerable. For example: an aggregation platform typically costs a broker between $3-5 per million. To extend this platform into the MT4 environment via one of the top tier bridging solutions will generally cost another $2-3 per million.

Therefore, for a prime of prime to offer an 'all-in' technology package to their clients, the minimum spend between both entities for technology would be $5 million, and could reach as high as $8 per million. Assuming the up-and-coming aggregation platforms are pricing on the lower end of the range at $3 per mil and taking advantage of the ecosystem bridging model at $1 per mil, the total cost savings will be between 50% - 67% for the downstream (retail) broker, and 25%-50% on the total spend.

In a time where prime brokerage fees and spreads are creating an increasingly difficult environment for operators of STP brokerages, it is inevitable that the 'ecosystem' style pricing, from both oneZero and other firms capable of offering the direct-to-retail technology stacks, will become a popular option as the industry as a whole explores new ways to cut costs.