Recently, there have been some new offerings coming on to the market offering retail brokers direct access to liquidity. The implication is that by accessing the primary market “directly”, the broker will get better trading terms.
This is actually not the case, and it shows a fundamental lack of understanding on the part of the technology companies who are providing the offering, and even more surprisingly, the “Prime of Primes” who are “clearing"it.
3 March 2020 – London headquartered IS Prime is the 15th fastest growing financial services company in Europe, according to the Financial Times’ list of Europe’s 1000 fastest growing companies, published on FT.com on 2 March 2020.
February was an excellent month for brokers as Covid-19 coronavirus fears brought volatility to a wide range of markets. Volumes were up substantially from January, with some brokers reaching record monthly totals.
Profits were also robust, driven primarily by late month declines in stock indices and gold. With the uncertainty surrounding coronavirus continuing, the volatility may persist well into March, if not longer.
2020 is off to a strong start as volumes and profits rebounded from a pedestrian month of December.
Early month profits were driven primarily by Gold, and the month finished strong on late month movements in the Euro. Indices also produced profits throughout the month as reactions to the spread of the coronavirus added volatility to equity markets.
When the European Securities and Markets Authority (ESMA) introduced its new trading rules in 2018, retail brokers had to rethink their strategies due to the more demanding regulatory environment and the corresponding squeeze in profits. In particular, following the Product Intervention Measures, brokers have been looking beyond Europe in order to diversify their client base and maintain volumes.
Liquidity is one of, if not the most important parts of a broker’s business and is one of its key differentiators - without the right pricing in the right products delivered in the right way it is extremely difficult for brokers to survive in this increasingly competitive environment. As a result, the proper assessment and selection of an FX Liquidity Provider is something that brokers should undertake very carefully.
At IS Risk Analytics, we oversee over 1 Trillion USD in notional volume on a monthly basis. This includes startup brokers, established powerhouses and everything in between.Within our client books we see all of the tricks malicious “retail traders” use to take advantage of brokers. This includes cross broker arbitrage, malicious Expert Advisors (EAs), spraying the market, spoofing, the list goes on.
When I sat on a panel at the FX Week conference in London alongside representatives from industry peers, we were all asked “how does the cost of your service compare to the cost of a Tier 1 PB?” The response of our peers was unanimous and astonishing, all of them stating that their service will be “a little more expensive” than a Tier 1 PB.
Today we were delighted to learn that IS Prime has been voted by readers of Profit and Loss as the Best FX Prime of Prime Services Provider, in their 2019 Readers’ Choice Awards, otherwise known as the FoXys.
Imagine the situation… you are sitting on the trading desk reviewing activity for the day and you come across a pocket of traders who were able to arbitrage your feed systematically. It has been a few hours since the transactions took place. The traders have already transferred the profits to linked accounts which have since withdrawn the funds. Now you must explain how this happened to your Head of Risk and CEO, who will undoubtedly not be pleased to hear the news.