Retail brokers generally state that around 75% of retail investors lose money - the majority of these losses are in the spread value of their trades (because they are trading on wide spreads) rather than because they call the market wrong. 

However, studies have shown that over the long-term (if you take out transaction costs and spreads), clients’ trading P&L is generally no better or worse than that of their brokers.

Whenever a firm decides to work with a new Prime of Prime (PoP), there are a number of steps involved and various factors to consider. Firms – particularly retail brokers servicing their own end clients - may not realise that the way the PoP approaches their initial onboarding process, their technology integration and their continued, ongoing support, will all become key factors in the success or failure of their business and their ability to service their own end clients.

After a relatively quiet start to the month, the second half of July brought strong profits for brokers, allowing most to far exceed the results seen in June. Although volumes were only up marginally from the prior month, revenues were robust because of broad-based USD selling and the late month rally in metals. By the beginning of August, metals had reached all time highs and EURUSD was at a level not seen for 16 months.

As market volatility persists, brokers have become increasing vigilant monitoring the risk of their clients’ potential (and realised) negative balance exposure following liquidation, but there is another side to liquidation risk that may be even more important for brokers to consider.

June profits and volumes were front-loaded with the bulk of PL in the first 10 days of the month, primarily due to broad-based USD selling. Profitability in that period was focused in EUR and JPY pairs, along with indices and gold. Mid-month activity was relatively flat, but the month finished well primarily because of the continuation of the gold rally. Overall, both profits and volumes recovered well from the lows seen in May.

In a follow-up to my recent post on Aggregation & Spreads: The Race to Zero, I’d like to drill down on the best practices that we use to help brokers distinguish between true retail flow and institutional or proprietary trading flow.

How can they tell which is which, and what can they do to ensure they are receiving the appropriate liquidity for each?

May volumes were very similar to April totals, but still far below the highs reached in February and March. Although volumes were in line with April, profits were far lower. Losses in oil suppressed profitability in the early weeks of May as the majority of retail clients held their long positions into the rally at the start of the month. Movements in indices later in May helped salvage respectable, though below average, overall profits for the month.

Jonathan Brewer, Managing Partner at IS Prime, joins the 'Virtual Vision Finance' liqiudity pannel discussion. 

5 June 2020 – IS Prime has been voted winner of the Best Trade Execution (Prime of Prime) category in the Global Forex Awards 2020.

In the last year we have seen a dramatic fall in interest from our clients and prospects, particularly retail brokers, in “True Prime of Prime” offerings , i.e. where a broker uses a Prime of Prime (PoP) purely as a credit intermediary and has ‘direct’ relationships with Tier1 Liquidity Providers (LPs).

Following IS Prime’s recent announcement about our partnership with Pelican Trading to integrate their social copy-trading technology into our trading platforms, it’s worth exploring some of the potential issues that copy trading can raise for both retail brokers and Liquidity Providers (LPs), and how IS Prime helps address those issues.

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Barry Flanigan, head of Electronic Trading Solutions (ETS) at IS Prime, talks to eForex magazine about the pitfalls of purely focusing on spreads.

April saw broker volumes fall off significantly from the near-record numbers recorded in February and March. Profits, though down as well, were respectable as a result primarily of mid-month moves in oil markets that saw prices fall briefly into negative territory. Profits were also buoyed by movements in gold and US indices. Oil prices will likely be in focus again in May as we approach the expiration of this month’s futures contract.

Nonfarm Friday is a day that used to be quite exciting for trading desks and traders alike, although the last couple years have been somewhat sleepy. After hovering in a tight range for an extended period of time, US Nonfarm Payroll figures dropped by 700,000 in the April release.

New products could potentially save brokers from losing millions of dollars

The last year has not been a particularly easy one for brokers. Increasing costs associated with regulatory compliance, lack of volatility in the markets, falling revenues, tighter margins and now, on top of all of that, the impacts of COVID-19, are taking their toll.

The recent rise in market volatility has left all brokers susceptible to being taken advantage of by predatory traders but this is particularly true for startups and smaller brokers. While the opportunities for traders to attempt to exploit brokers have always existed, current market conditions have exacerbated the risk with strategies ranging from weekend gap loading to depth of book and spread arbitrage.

Tuesday 14 April 2020 - IS Prime Hong Kong, part of the ISAM Capital Markets Group, has appointed Antony Tan as Vice President – Trading Solutions, Asia. Tan joins IS Prime Hong Kong from Invast Global where he was Head of Dealing Services.

Volume totals in March matched the strong numbers from February, though daily figures trailed off late in the month. Daily profit figures also softened in the second half of the month, but monthly totals exceeded February as volatility in a broad range of markets brought strong early month results. After the turbulent market movements in February and March, volatility will likely continue while markets try to discover their true bottom. 

Like many firms across the Globe, the IS Prime team is now working from home and adjusting to a new way of living and working.

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 15^th 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.

28 February 2020 –  IS Prime has been named one of the world’s most influential financial technology companies, following nominations by a panel of expert judges from some of the most respected companies in the financial services industry including EY, Lloyds Banking and Baringa.

In previous blog posts we have discussed how traders sometimes take advantage of unwary brokers by engaging in various forms of malicious activity (such as flooding trade servers with orders), and why it’s critical for brokers to optimise their risk management strategies to minimise their risks.

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.

IS Prime Hong Kong, part of ISAM Capital Markets, has just announced that it has been granted a Type 3 Leveraged Foreign Exchange Trading licence by the Hong Kong Securities and Futures Commission (SFC).

Good workflow and optimisation go hand in hand. Indeed, the terms are almost synonymous.

What makes the difference between success and failure in the retail FX marketplace?

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. 

In this article we explore best practices on liquidity management and how IS Prime and the ISAM capital markets group interact with liquidity providers.

4th November 2019 – IS Prime has reported continued growth, with a 60% increase in turnover y/e 31 March 2019.

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.

August 21 2019, London and New York - Award winning Prime of Prime and Liquidity Provider, IS Prime has extended its liquidity distribution by connecting to TradAir, a leading provider of FX and Digital Asset trading solutions. 

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.  

12 July 2019 – IS Prime has been named Best Prime of Prime Provider at the prestigious e-FX Awards, organised by FX Week. The award recognises the most comprehensive and satisfactory service provider in the Prime of Prime space.

In 2015, I wrote an opinion piece about the inherent inefficiencies of re-aggregation of Prime of Prime feeds and I believe it is a good time to refresh this topic from a different perspective.

Today we are pleased to announce that IS Risk Analytics has released its brand new risk engine and bridge software, an exciting step for the product and team, delivering market leading risk management tools and services to their clients.

Since early May this year, gold prices have been increasing almost daily, to the extent that we are now at a similar level to the highs of August 2013, in USD terms.

Report identifies fastest-growing and most dynamic small and medium sized businesses (SMEs) across the UK

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.