When reflecting on a now almost past 2013, it is fair to say that one of the many long-running subjects for discussion this year has centered on trading platforms.
With the advent and subsequent increase in popularity of newcomers such as tradable and cTrader, FX brokers and traders alike have become considerably more discerning than just a few years prior, and as with any evolution, developers have gritted their teeth as they vie for market share in what is now a cutting-edge technological environment.
Institutional firms are no exception, and as specialist software companies now head toward open-source, customizable solutions, trading platforms are keeping pace with this dynamic.
Earlier in the year, NetDania joined the platform technology race, with its new NetStation product, which features per-seat pricing which is an innovative move, reflecting the low spread and narrow margin environment in which most firms operate these days.
In this week's Forex Magnates Executive Interview, NetDania Director, Jonas Nielsen outlines specific characteristics that he considers vital to keep a toehold in the upper echelons of the platform industry.
Please detail your professional background, and how you arrived at your current senior position at NetDania.
I entered the financial industry as a headhunter for a company specialized in front office roles.
In 2005 I set up a consultancy boutique specialized in FX Risk Management with a colleague, and it was in that role I was approached by NetDania to assist building their presence in FX.
Upon assuming your post as Director, what did you initially seek to achieve and how did you set about achieving it?
1. Trading implementation in NetDania NetStation, with both a retail, an institutional and a software sales leg.
2. Commercialization of our massive visitor flow to netdania.com
On the trading technology side we will be launching NetDania Markets. It will not be a brokerage, but a service and software provider offering software with trading integration. Brokers are on the hunt for clients, and quite a few have realized that we have the prospects. We will release a Public Trading API to let the brokers do some of the work.
Please detail the pricing model behind NetStation, and how it is capitalized when brokers take it up.
• Retail leg: NetDania Markets will offer NetStation with broker integration. Users can trade with their retail brokers using NetStation as a front-end containing value-added services.
We will launch with FXCM and FXCM Active Trader for individuals, and there will be support for CFH Clearing for Professional clients. Pricing on the platforms will vary by broker.
• Institutional leg: NetStation will be offered as a part of institutional white label packages, including the one from CFH Clearing. As such, it will feature the prime broker’s pricing Liquidity setup. We are flexible in terms of white labeling, also towards other institutions that maintain their own liquidity setups or trading venues.
• Software leg: We license NetStation for non-trading and analysis purposes as well.
NetStation is huge within corporate FX in the UK.
It would be interesting to understand the rationale behind the business model upon which NetStation operates, with a fixed per-seat license fee rather than volume-based charges. Do you see this as a more profitable method now that spreads are very low, and does NetStation position itself toward a different type of trader than other volume-capitalized platforms?
We are generally flexible as to the pricing model. As to per-seat pricing, it is most often used when we sell NetStation in non-trading roles. NetStation has a very impressive uptake in the UK corporate FX market, with users such as HiFX, MoneyCorp, Currencies Direct, Global Reach - and the list goes on.
As for NetStation with online e-FX broker integration, we will be renumerated as Service Providers by our partners. There is money to be made on the liquidity side, but we are not quoting prices.
Is there a prominent market, and if so in which region, for external charting software within the binary options space, as now many binary options platform developers have begun incorporating charts into their platforms?
As to region, I believe most of the requests we have had came from Cyprus and Israel. We receive quite a few requests to integrate charting in these platforms, and we have a chart re-seller agreement with one.
How can volumes be driven upwards via the use of technology now that social trading and mobile platforms proliferate the market place?
Probably through gamification and simplifications. Unfortunately, instead of telling people to spend 10.000 hours on learing how to trade, the trend seems to be to tell them they can just follow someone else. On mobile the medium itself leans heavily towards activity, and volumes can probably be increased there. However, we do not really condone going the simplified way. Companies such as Corrsight are paving a way for more substantial services that actually help traders. We work more along those lines. That is also a way to attract and maintain both clients and volume.
What is the ideal business model for an FX white label within the institutional sector? How is it best structured in order that the technology, platform, back-end, brokerage and white label partner can maximize their profit potential across the board?
Maintain as much control of the liquidity setup as possible. Besides that, one size doesn’t fit all. I would look towards facilitators or Prime-of-Primes that have made it a point to simplify and conceptualize their offerings, but others may prefer to shop around for solutions.
There has been a lot of regulatory discussion about HFT in Europe. Do you think the HFT participants will continue to focus on North America, or will European participants continue to operate in Europe and find a means of continuing to use algorithms and HFT methodology within the parameters of the regulatory structure? If so, what technology will be used?
Equities and OTC FX are very different ball games. I am not versed well enough to tell you what technological approach to take. For exchange traded instruments focus will probably be on North America. Stripped of my personal interest, regulators and consumer groups may have a factual point in that HFT sometimes adds volume but not necessary liquidity when we discuss the former type of market.
What is the future for MetaQuotes, after the gaining of market share for new platforms such as cTrader and tradable? Do you think the institutionalizing of MetaTrader 4 by MetaQuotes by blacklisting social trading programs and encouraging all third party applications to be submitted to MetaQuotes for offer via the app-store is retrograde and will cause more companies to look for open source back-end systems and alternative platforms?
Jonas Nielsen, Director, NetDania
I do not think Social Trading threatens platforms for individual auto-trading and strategy definition longer term. Many traders come out of social trading disappointed, and for the foreseeable future MetaQuotes will remain large within the retail space for individual strategy definition and execution. Their decision was understandable, but of course many got upset with it. I know fore sure that brokers are looking for alternatives to MT4 on the auto-trading side. We are working on something.
What is NetDania's plan for the coming year?
We will be assisting brokers integrating with NetStation using our Trading API, and we will be launching the NetDania Markets website featuring the supported brokers. At the moment, we receive a lot of interest from clients and brokers alike. There is traction on mobile side, and our highly rated mobile app is to be released with trading integration.
