Managing risk can be a challenging endeavour. Which clients do you keep in which book, and how do you structure the decision-making process that leads to these categorisations?
Marios Antomiou, Chief Risk Officer, INFLYX
Hundreds of billions of dollars
Every day and all over the world, hundreds of billions of dollars are traded in the forex market, and a significant share of this total volume comes from retail brokerages and the clients that they serve.
The potential savings for retail brokers if they apply sound Risk Management strategies are considerable. Conversely, the time and effort needed to build highly skilled departments working towards this aim are significant indeed.
Beyond Liquidity
Enter INFLYX: seeking to broaden the scope of liquidity services and deliver value for users of these, INFLYX operates a programme of comprehensive solutions for managing brokers’ risk.
The intention behind this is for brokers not only to source enhanced deep liquidity but also for them to maximise their revenue while avoiding excessive exposure. Small- and medium-sized brokers can benefit in a profound way by avoiding the need to operate resource-heavy full dealing rooms, and they can also save the time involved in performing their own detailed risk management.
There is certainly nothing new about volatility in forex. This volatility has become greater overall in recent years, though, due in part to major geopolitical developments in many of the world’s biggest markets.
The uptick in currency volatility and requests from brokers were the primary drivers of INFLYX expanding its services into risk management – this allows brokers working with the liquidity provider to take advantage of the long experience built up by INFLYX’s team.
Advantages of experience
INFLYX’s team of risk managers has decades of collective experience, tackling the crucial decisions hands-on to manage the risks faced by brokers. Having worked in a variety of institutions from retail brokers to major European banks, INFLYX’s risk team led by Marios Antoniou is the go-to source for maintaining a sustainable brokerage.
No two brokers are the same: they offer a huge range of different instruments which are driven by a nearly infinite number of different factors and traded by a diverse body of retail clients. INFLYX’s experience then is designed to be as personal as possible, offering fully customisable services to brokers big and small.
Transparency, the key to INFLYX’s success
Clients of liquidity providers might sometimes legitimately complain that risks and uncertainties are explained to them in insufficient detail. Not so with INFLYX.
The role of communication is centrally important in effective risk management. When the parties involved can debate and express ideas and understand each other fully, their company’s strategy to manage risk has a firmer guarantee of success. INFLYX’s risk managers are trained to help you determine realistic goals and the steps on the road to achieving them.
In addition to personal service, INFLYX’s open pricing models, comprehensive support for integration and constant readiness for open discussion make its risk management operations ideal for a broker that seeks close cooperation with its liquidity provider. Transparency and full communication are the cornerstones of INFLYX’s offerings.
Building a risk culture
Many professionals seem to lack the ability to define what the word ‘risk’ really covers in its full scope.
The word might be correlated solely with negative results. If we think that risk can be the result of multiple scenarios with certain probabilities, it would be easy for us to see that in the forex industry, we face not only threats but opportunities as well. The better people understand risks, the more efficient the operations of their companies.
A key element of this is risk culture, which might be defined as the values, beliefs, knowledge and understanding of risk shared by a group of people with a common intended purpose and in particular the leadership and employees of their organisation.
Different risk cultures are present in almost every company, but we have to ask whether the risk culture within a given organisation is effective and indeed whether it could be termed healthy and suitable for the long-term development of the business.
Using INFLYX’s liquidity and risk management services means entering into a partnership that’s designed with long-term sustainability in mind. Developing a successful risk culture is a worthy investment for any broker and one that can stand the test of time.
This article is sponsored by INFLYX, a leader in bespoke liquidity solutions and a dependable source of liquidity for hundreds of popular CFD instruments.
