Let's cast our minds back 15 years or so.
Who would have thought that during those transformatory years of retail electronic trading in which the large, well-established household names such as Interactive Brokers, CMC Markets, FXCM and IG Group were facing a competitive onslaught in the form of a deluge of new brokerages which were all vying for market share in Europe, Australia and North America would all now be approaching a much more global audience from operations in one city.
That city is Dubai. At next week’s iFXEXPO, where TraderEvolution will be discussing the method by which your brokerage can master the technological pathway to attracting multi-asset traders from global markets, brokers and traders from regions with developed multi-asset trading environments will be there. Is your brokerage ready?
In Dubai, OTC FX is much less of an attraction, whereas the ability to offer exchange-listed products is paramount.
Back at the time when a whole host of new companies offering OTC FX and CFD trading via off the shelf solutions with the ability to go to market very quickly with Software as a Service (SaaS) solutions created a huge wave and nurtured a whole generation of new traders, the near-identical nature of the user experience only became an issue several years later.
For many retail brokerages, concentrating on increasing the amount of monthly active traders or the acquisition and retention of clients became the main priority, depicting the background in affiliate marketing that many of the new entrants to the retail FX business had during the first decade of this Millennium.
That led to huge introducing broker (IB) networks being cultivated across the world, particularly in China and South-East Asia, with those IBs wanting the security and prestige of placing their clients with European, Australian or North American companies.
Huge Opportunities, Huge Differences
The focus on Dubai by a large proportion of retail trading companies has presented a new set of challenges.
The biggest challenge is also perhaps the biggest opportunity.
In the years before Dubai became the latest ‘hub’ for retail FX brokerages, it had been garnering massive interest from large and highly experienced exchange traders and listed derivatives companies with their origins across the Asian continent, and the BRICS regions which are all home to established commodities and listed derivatives markets where the emphasis is on exchange listed products rather than OTC FX and CFDs.
Dubai was home to some of the most interesting emerging exchanges in the beginning of the 2010s, perhaps most notably the DGCX, which until this day states its most traded instrument as the Indian Rupee Futures Contract.
Vast swathes of brokers and traders from South Asia - India, Pakistan, Bangladesh, as well as from Latin America, South Africa and the Far East have viewed Dubai as their commercial center for many years.
These are all regions in which exchange listed products dominate, therefore OTC brokers which have begun to leverage the opportunities in Dubai now face an important crossroads in that being limited to a platform which only offers OTC products would represent a major barrier to onboarding business from the regions which attendees to the iFXEXPO in Dubai, or who are already established in Dubai represent.
Therefore, to be able to service existing customers whilst being able to attract Dubai’s finest, brokers need to be able to provide a trading environment in which OTC FX, as well as listed derivatives available on every global market via every exchange, are available on one platform via one account.
Are you equipped to attract the multi-asset giants in Dubai?
Given that Dubai serves as a meeting point for multi-asset trading companies from various regions as well as a base for the international operations of many multi-asset traders and brokers, a considerable matter of importance is to consider your brokerage’s ability to handle the way trades are executed across various executing venues worldwide.
To be able to engage companies that are present in Dubai or which attend conferences in Dubai, the different methods by which exchanges operate according to the region in which they are based is vital. For example, the execution of a futures contract on the Johannesburg Stock Exchange differs significantly from how such a contract would be executed on a derivatives exchange in Chicago.
The rules and structure of each executing venue often require different parameters, and brokers looking to capitalize on the international nature of the electronic trading industry which is represented in Dubai should consider how their trading infrastructure can adeptly handle diverse connections to exchanges operating under distinct market frameworks.
Across the world's financial centers, each exchange operates within its unique set of rules and regulations, impacting the execution of trades. From market protocols to order execution methodologies, the ability to navigate these intricacies becomes a strategic advantage for brokers aiming to thrive in the global electronic trading landscape which is where the TraderEvolution platform's venue-neutral back end solution is able to place firms in a unique position to be able to handle these differences in-house.
To fully leverage the international opportunities presented in Dubai, brokers can consider investing in robust trading infrastructure capable of seamlessly connecting to various exchanges worldwide. The adaptability of the trading infrastructure becomes crucial in accommodating the diverse execution methods employed by different exchanges. Ensuring that the technology backbone is equipped to handle these variations empowers brokers to offer efficient and tailored services to their clients participating in the global trading arena.
Since the beginning of this decade, Dubai's authorities realized the opportunity that awaited, and suddenly opened up to the world as a global base for every industry sector. Dubai now heralds itself as the business center for everyone wishing to approach their clients everywhere, with no restrictions, no tax, no political coercion and no barriers to global business.
Over the past two years, brokerages from all over the world have been opening offices in Dubai, keen to leverage neutrality and opportunity. CMC Markets, one of the world's longest established retail OTC brokerages has relocated its entire institutional team to Dubai. Many retail firms that began their operations during the rise of the off-the-shelf brokerage boom in the mid-2000s have set up operations in Dubai.
Dubai’s opening up to the entire world which enabled brokers from every region to be part of a truly global city has presented a wave of new opportunities, however with those new opportunities come a range of challenges which now need to be overcome in order to maximize and scale a business.
Being strategically positioned in Dubai provides a unique vantage point for brokers in the electronic trading industry.
As the city continues to attract multi-asset trading companies engaged in global activities, brokers must equip themselves with the knowledge and infrastructure necessary to navigate the intricacies of diverse executing venues.
Join TraderEvolution at booth number 8 to discuss this with our senior executives, and hear more about the way to scale your business at the “Tech Renaissance” panel on January 17 at 1400 on the main stage, where TraderEvolution Chief Product Officer Andrew Saks will elaborate in full detail on how TraderEvolution helps many electronic trading companies scale their businesses in this direction with aplomb.
