Why Does Liquidity Differ Between “Prime of Prime’s”?

Posted by Richard Perona on Apr 24, 2019 8:33:02 AM

Recently at an FX conference, a developing fund manager and I crossed paths. After a few polite introductions, I quickly realized that, based on his audited returns, the new fund manager was proficient in trading the FX market. The detailed description of the fund’s fundamental and technical trading strategies was welcoming to hear.
After a few routine questions from the prospective client, the topic promptly turned to spreads and liquidity (my favorite). The fund manager was comparing pricing between FX brokers and asked why spreads are so contrasting amidst all of the firms in question.

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Topics: FX Liquidity, Thought Leadership, Forex Brokerage, Start Your Own Forex Brokerage, Brokerage, SYOB, FX Broker Startup, Forex B2B, Regulation, Wholesale FX, Institutional Trader, Institutional Broker

Does Your Liquidity Provider Really Cover Your Liability with Negative Balance Protection under ESMA?

Posted by Shobin Mathew Simon on Mar 14, 2019 8:50:19 AM

The European Securities and Markets Authority (ESMA) has implemented a range of measures intended to protect retail clients who are trading leveraged products, such as CFD’s.
The product intervention measures mandated by ESMA, under Article 40 of the Markets in Financial Instruments Regulation (MiFID II) include:

  1. Maximum leverage limits on the opening of a position by a retail client ranging from 30:1 down to 2:1.
  2. A margin closeout rule on a “per account” basis (at 50% of minimum required margin).
  3. Negative balance protection on a “per account” basis.
  4. A restriction on the incentives offered to trade CFDs. 
  5. A standardised risk warning, including the percentage of losses on a CFD provider’s retail investor book.
  6. Prohibition on the marketing, distribution or sale of binary options.
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Topics: Traders, FX Liquidity, Forex Brokerage, Start Your Own Forex Brokerage, SYOB, FX Broker Startup, Forex B2B, MiFID2, Wholesale FX, FX Liquidity Provider, Retail Trader, Retail Broker, Institutional Trader, Institutional Broker

2018: Short Cuts make Long Delays

Posted by Raphael Ribeaucourt on Feb 27, 2019 8:40:31 AM

2018 was a challenging year for retail FX brokerages with many of them being sold over the counter and others struggling to implement the new rules mandated by regulators.

What we can say is that 2018 was first and foremost a year of new regulation. Legal teams have been working hard to structure businesses differently and/or adapt to the new rules. Quiet contrary to the goals of the regulators’ goals, offshore is once more becoming the broker’s common strategy, especially to continue to offer high leverage to retail clients.

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Topics: Traders, Industry Trends, Thought Leadership, Forex Brokerage, Brokerage, Forex B2B, Regulation, MiFID, MiFID2, Retail Trader, Retail Broker, Institutional Trader, Institutional Broker

FX Brokerage Owner, What's Your Exit Strategy?

Posted by Natallia Hunik on Feb 12, 2019 11:11:01 AM
Planning an exit strategy for your FX brokerage is an important consideration, and one that certainly crosses an entrepreneur's mind as their business grows and evolves. Given that we currently seem to be in somewhat of a consolidation wave across the industry, this topic has been a popular one behind closed doors, as well as in the media.

Generally, compared to the software industry where we are looking at average multiples of 21-25 times EBIDTA, M&A transactions in the retail FX broker space are showing multiples of 5-10 times EBIDTA at most for the best deals we have seen recently.
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Topics: Traders, Company, Thought Leadership, Forex Brokerage, Forex B2B, Retail Trader, Retail Broker, Institutional Trader, Institutional Broker

What to Expect When Moving from Retail to Wholesale (Institutional) FX

Posted by Richard Perona on Apr 22, 2018 12:12:00 PM

I thought it would be useful to compile a short list of the main differences found when trading OTC (over-the-counter) FX with an STP (Straight Through Processing / No Dealing Desk) “Prime of Prime” and a Retail brokerage.

The differences can be categorized as follows:

- Vetting / Onboarding
- Netting vs Hedging
- Deposits
- Execution
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Topics: Traders, Thought Leadership, Forex Brokerage, Brokerage, Forex B2B, STP, Wholesale FX, Retail Trader, Retail Broker, Institutional Trader, Institutional Broker

How to Get an LEI Number if You Don’t Have a LOU (Local Operating Unit) in Your Country

Posted by Natallia Hunik on Apr 10, 2018 8:20:55 AM

The global push for greater transparency in financial markets continues to gain traction with top tier regulators now requiring that all entities, engaged in trading financial markets, report their LEI (Legal Entity Identifier) number to regulatory repositories.
In the European Union, this process started as of January 3rd, 2018 as per MIFID 2. In Australia, in accordance with ASIC Corporations (Derivative Transaction Reporting Exemption) Instrument 2015/844, relief from the requirement to report the entity Identifiers ends on September 30, 2018, which means that starting from September 30, 2018, entities regulated in Australia will need to report LEI numbers for their corporate clients.

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Topics: Traders, Forex Brokerage, Start Your Own Forex Brokerage, Brokerage, SYOB, FX Broker Startup, Regulation, MiFID, MiFID2, Retail Trader, Retail Broker, Institutional Trader, Institutional Broker

Who Are the Real Beneficiaries of MIFID 2?

Posted by Advanced Markets Team on Jan 22, 2018 9:18:50 AM

I’m sure there aren’t many industry peers who have managed to escape the MIFID 2 avalanche this past year and, perhaps only the frenzy surrounding crypto currencies, ICO and Bitcoin comes close to the boiling hot MIFID 2 topic in 2017.

For the better half of 2017, brokers and trading firms, falling under the reach of MIFID 2, were very busy implementing the parameters and protocol needed in order for them to comply with the new regulatory standards.

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Topics: Traders, Forex Brokerage, Brokerage, Regulation, MiFID, MiFID2, Retail Trader, Retail Broker, Institutional Trader, Institutional Broker

MiFID 2: Are You a High Frequency Trader?

Posted by Richard Perona on Dec 6, 2017 6:16:01 AM

As January 3, 2018 approaches, FX industry participants are busy reading through the new financial laws of “Markets in Financial Instruments Directive” (MiFID 2) in an attempt to understand how these will affect them going forward.

Originally, MiFID was created following the 2008 financial crisis in an effort to standardize the regulatory disclosures for particular markets. MiFID 2 came along with a revised set of standards which will enforce transparency, enhance investor protection and expand reporting to regulators, effectively changing the way that Europe’s secondary markets function. The significance of these changes should not be underestimated as the regulatory expectations of higher quality data sets will most likely lead to more regulatory issues and fines.

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Topics: Traders, Forex Brokerage, Brokerage, Regulation, MiFID, MiFID2, Retail Trader, Retail Broker, Institutional Trader, Institutional Broker

MiFID II Reporting - DRSPs, APAs, ARMs, CTPs

Posted by Natallia Hunik on Oct 19, 2017 8:00:00 AM

by Natallia Hunik, Global Head of Sales at Advanced Markets & Fortex, Inc. and Ron Finberg, Head of Business Development at Cappitech.

MiFID II has been the focal point of many discussions in the European financial world recently. We have previously focused our attention on several of the main aspects of this upcoming regulation, such as Best Execution Policy, Reporting Framework Updates and Tied Agents Designation.
In this article, I would like to elaborate further on some of the reporting mechanisms that are being put in place by one of the world’s most respected financial regulators, the U.K’s Financial Conduct Authority (FCA).

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Topics: Traders, Forex Brokerage, Start Your Own Forex Brokerage, Regulation, MiFID, MiFID2, Retail Trader, Retail Broker, Institutional Trader, Institutional Broker

What is the Best MAM System for MT4 / MT5?

Posted by Anya Aratovskaya on Sep 26, 2017 8:50:43 AM

MAM is an acronym for Multi Account Manager, a plugin originally designed for the Meta Trader 4 Platform to allow the proportional (or any set) profit and loss distribution from Fund Manager (or Master) to Investors (or Sub Accounts).

The Master Account serves as the primary (and the only real) trading account, and sub accounts receive the results of the actions performed on the Master Account (only proportional COPIES of the original trades).

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Topics: Traders, Forex Brokerage, Start Your Own Forex Brokerage, Brokerage, SYOB, FX Broker Startup, Forex B2B, MT5, MT4, MetaTrader, Institutional Trader, Institutional Broker

MiFID II - How Many Liquidity Providers Should a Broker Have?

Posted by Natallia Hunik on Sep 13, 2017 8:42:49 AM

Best execution policy under MiFID adopts a multi-faceted approach that addresses, amongst other things, quality of execution, trading conditions extended to clients and the counterparty selection process. It also provides directions and guidelines on how best execution can be achieved.

The execution policy, set forth in MiFID II rests on several main pillars and I will briefly describe my findings on these below.

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Topics: Traders, FX Liquidity, Forex Brokerage, Start Your Own Forex Brokerage, Regulation, MiFID, MiFID2, FX Liquidity Provider, Retail Trader, Retail Broker, Institutional Trader, Institutional Broker

Does a “Tied Agent” Designation Equate to an “Introducing Broker (IB)” Under MiFID II?

Posted by Shobin Mathew Simon on Aug 15, 2017 7:50:00 AM

With the deadline for MiFID II implementation fast approaching, a lot of confusion and uncertainty still exists within the FX Industry.
MiFID II regulation is divided into several distinct rule sets with the legislation applying to a broad range of financial industry players, those who provide investment services, such as investment banks, portfolio managers and brokers, and intermediaries such as inter-dealer brokers and market-makers.
The main objective of MiFID II is to ensure the fair, effective and safe operation of financial markets. Failure to comply with the directive could result in significant fines.

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Topics: Traders, Forex Brokerage, Start Your Own Forex Brokerage, Regulation, MiFID, MiFID2, Institutional Trader, Institutional Broker

Top 5 Most Useful MT4 / MT5 Bridge Features

Posted by Anya Aratovskaya on Aug 4, 2017 6:17:18 AM

The MetaTrader 4 Bridge is one of the most popular add-ons for MT4 Servers. It was created in early 2000 and, ever since then, there have been many rumors as to who actually developed the first commercial version (of course, many industry veterans know the name).

MetaTrader 5 bridges are now beginning to emerge, and the speed of their development is directly correlated with the very recent growth in MT5 adoption rates.

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Topics: Traders, Platforms & Technology, Thought Leadership, Forex Brokerage, Brokerage, MT5, MT4, MetaTrader, Institutional Trader, Institutional Broker

What is an LEI Number and Where to Get One?

Posted by Natallia Hunik on Aug 1, 2017 8:19:40 AM

Welcome to a financial world, full of mysterious acronyms. LEI, CASS, ECP, EMIR, MiFIR, MTF, OTF… This industry just loves acronyms and MiFID II just gave us a whole lot of new ones to work with.
One that I have started hearing more often is the LEI number and it relates directly to the requirements embedded in the upcoming MiFID II directive. The following article will hopefully give answers to these much-asked questions, what is an LEI? Who needs one? Why it is required? How do I get one?

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Topics: Start Your Own Forex Brokerage, Brokerage, SYOB, FX Broker Startup, Regulation, MiFID, MiFID2, UK FCA Registry, Retail Trader, Retail Broker, Institutional Trader, Institutional Broker

MiFID II: Will You Finally Know Who Is On The Other Side Of Your Trade?

Posted by Natallia Hunik on Jul 19, 2017 7:00:00 AM

MiFID II, the “Markets in Financial Instruments Directive”, is legislation that is set to be implemented across the European Union on January 3rd, 2018.
As this due date approaches, many market participants are scrambling to implement changes to hopefully comply with the new rules. Some, on the other hand, prefer to procrastinate as long as possible in the hope of getting further clarity on this pending regulation.

Regardless, what is clear at this point is that there are a number of significant changes that are coming down the pipe for the FX brokerages.

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Topics: Traders, Forex Brokerage, Prime of Prime, Start Your Own Forex Brokerage, Brokerage, SYOB, FX Broker Startup, Licensing, Regulation, STP, MiFID, MiFID2, Institutional Trader, Institutional Broker

How Does One Define “Best Execution” for FX Trading Firms Under MiFID II?

Posted by Anya Aratovskaya on Jul 12, 2017 8:41:06 AM

While some industry sources are arguing whether or not MiFID II will dramatically affect the FX industry, most FCA and CySEC licensed FX brokers are rapidly adjusting policies in order to comply with the new requirements. 

One of the key changes of MiFID II is an implementation of the term “best execution” and a directive to ensure “All Sufficient steps” (Article 64 -4) are in place to support that.

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Topics: FX Liquidity, Forex Brokerage, Start Your Own Forex Brokerage, Brokerage, SYOB, Licensing, Regulation, MiFID2, FX Liquidity Provider, Institutional Trader, Institutional Broker

FX Leverage Globally

Posted by Natallia Hunik on May 3, 2017 8:34:41 AM

FX is the most liquid market in the world with over 5 trillion USD in daily turnover, and 1.6 trillion USD in OTC spot transactions executed each day on average. Volatility makes it an attractive investment vehicle for many traders around the world, institutional and retail.
Retail FX has been around for longer than 2 decades now, but we have yet to see the industry reach a mature state.

Two decades might be just an infancy stage for an asset class, one would say, and would be right.
Regulatory frameworks in many countries are not greatly fine-tuned to deal with FX or are not encompassing FX at all.

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Topics: Traders, Thought Leadership, Forex Brokerage, Start Your Own Forex Brokerage, Brokerage, SYOB, FX Broker Startup, Regulation, STP, Leverage, UK FCA Broker, Retail Trader, Retail Broker, Institutional Trader, Institutional Broker

Navigating the ASIC FX Brokers’ Register and, What Does it Mean to "Make a Market" in Australia?

Posted by Natallia Hunik on Apr 5, 2017 8:48:25 AM

More than a few times over the past year, I have come across instances where companies have thought that they were paying for legitimate ASIC licenses when, in reality, that was not the case. There appears to be several “light fingered” agents operating in the market (particularly, in the Asia region) who are “selling ASIC licenses” at a discounted price.

As we all know, there is no such a thing as free lunch. The use of words such as “discounted” and “fast-track”, with regard to obtaining a license in a reputable regulatory jurisdiction, should have immediately raised your eyebrows.

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Topics: Traders, Forex Brokerage, Start Your Own Forex Brokerage, Brokerage, SYOB, FX Broker Startup, Licensing, Regulation, Institutional Trader, Institutional Broker, FX Jurisdictions

Biggest Trends in Chinese FX Market in 2017

Posted by Natallia Hunik on Feb 20, 2017 9:13:22 AM

Do you think 2017 will be another big year for prime of prime? If so, you’re in very good company.

Our view is that, as the Chinese market matures, the 2017 trends in China could boil down to the following:

  1. Quality over price: sourcing liquidity from real prime of primes
  2. Looking for robust technology and connectivity solutions that scale
  3. A move to MT5
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Topics: Industry Trends, Thought Leadership, Forex Brokerage, Prime of Prime, Forex B2B, MT5, MT4, MetaTrader, Institutional Trader, Institutional Broker

How Do STP Brokerages Make Money?

Posted by Yuhan Mo on Feb 1, 2017 6:14:38 AM

There are several ways that an STP brokerage can make a profit. The broker may either charge their clients a commission ($X per $million), apply a markup to the price feed, or perhaps a combination of both.

In MT4, the commission charged to the client is typically set in deposit currency per lot ( In this article, we will be using US Dollars as deposit currency for an easy and clear explanation).
An STP brokerage can also choose to charge their clients a markup, which will be added into spread that their retail clients see. Markup is normally defined as points added per lot. Markup is usually invisible to your clients and tends to be more flexible as you have the ability to adjust the markup according to market conditions.

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Topics: Traders, FX Liquidity, Forex Brokerage, Start Your Own Forex Brokerage, Brokerage, Forex B2B, STP, MT4, Wholesale FX, FX Liquidity Provider, Retail Trader, Retail Broker, Institutional Trader, Institutional Broker

Fundamental Manual or Algo Trading – Which is Best?

Posted by Richard Perona on Jan 17, 2017 8:22:33 AM

In 2016, we have seen some incredible market dislocation due to various global events (BREXIT, US Elections, OPEC, GBP Flash Crash, FOMC to name a few).
Having experienced my fair share of these moves, I find myself in a unique position to be able to speak with a diverse group of market participants, ranging from Fund Managers to Hedge Funds and individual traders, each of them trying to successfully navigate through these turbulent markets.

Recently, I have found myself in conversations with seasoned industry veterans who asked for my advice on what I thought would be the next shoe to drop?

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Topics: Traders, Thought Leadership, Forex Brokerage, Algo Trading, Manual Trading, Retail Trader, Retail Broker, Institutional Trader, Institutional Broker

FX Glossary: The Ultimate Dictionary of Forex Terms You Should Know

Posted by Advanced Markets Team on Jan 16, 2017 10:49:00 AM

There are many Forex terms a FX Professional have to know to do a great job and to be successful. In order to help Brokers and Traders to get to know the basics of the FX industry, the Advanced Markets Team created this glossary. 
Discover the Advanced Markets FX dictionary here and feel free to contact us if you want us to add further terms!

A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z

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Topics: Traders, Thought Leadership, Forex Brokerage, Start Your Own Forex Brokerage, Brokerage, SYOB, FX Broker Startup, Forex B2B, Retail Trader, Retail Broker, Institutional Trader, Institutional Broker

5 Reasons to Switch Your Liquidity Provider

Posted by Anya Aratovskaya on Dec 20, 2016 3:24:10 PM

Traditionally, December is the month when the majority of FX professionals take some well-deserved time off. Fund Managers are avoiding any major market participation that could negatively impact annual return statistics; bank employees are trying to use up their remaining vacation time, and the overall the spirit of holidays (Christmas, Hanukkah, Omisoka, Kwanzaa, and many others) makes December the perfect time to relax ahead of the January hype.

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Topics: FX Liquidity, Platforms & Technology, Start Your Own Forex Brokerage, SYOB, FX Broker Startup, STP, MT5, MT4, Wholesale FX, FX Technology Provider, FX Liquidity Provider, Institutional Trader, Institutional Broker

Trading via FIX API

Posted by Anya Aratovskaya on Nov 23, 2015 5:21:00 PM

FIX (Financial Information Exchange) API (application programming interface) is a highly scalable electronic communication protocol to facilitate the real-time exchange of information related to financial markets. It has become the de facto standard method of pre-trade, trade and post-trade communication. Market participants including banks, hedge funds, prime brokers and “prime of primes” utilize FIX for their own trading needs or to connect directly to clients.

To give you an indication as to how popular FIX is: the FIX Trader Community has around 110 000 registered members and 275 corporate members (including Goldman Sachs, Barclays, Morgan Stanley and so on).

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Topics: Platforms & Technology, Thought Leadership, Start Your Own Forex Brokerage, SYOB, FX Broker Startup, Forex B2B, FX Technology Provider, FX Liquidity Provider, FIX API, Institutional Trader, Institutional Broker

Efficiently Sourcing FX Block-Trade Liquidity without Information Leakage or Market Impact

Posted by Anthony Brocco on Nov 16, 2015 9:51:33 AM

New electronic solutions for FX block trading are emerging as this last bastion of voice trading is being reshaped by increased regulatory capital requirements, tighter internal credit standards and fallout from the fixing quagmire.

This article discusses the Full Order Execution (FOX) block trading mechanism offered by Advanced Markets, which operates a low latency, direct market access (DMA) liquidity pool in which liquidity is streamed by 10 leading FX banks.

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Topics: Industry Trends, Thought Leadership, Block Trading, Wholesale FX, Retail Trader, Retail Broker, Institutional Trader, Institutional Broker

10 Things You May Be Missing When Selecting Your Liquidity Partner

Posted by Natallia Hunik on Oct 14, 2015 12:14:00 PM

I, along with my institutional FX Team at Advanced Markets and Fortex, am dealing with FX brokers who may be in search of liquidity, technology solutions of all kinds, infrastructure enhancements or sometimes just a price feed that is stable and reliable on a daily basis. We have seen it all from novice brokers that need everything explained from A to Z, medium-sized price-conscious brokers that are trying to bypass pre-qualifications and over-state their volume figures to get better deals to larger brokers asking us to fill out  lengthy RFPs (Request for Proposal)  while the work on selecting a new liquidity partner

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Topics: FX Liquidity, Start Your Own Forex Brokerage, Brokerage, SYOB, FX Broker Startup, FX Liquidity Provider, Retail Trader, Retail Broker, Institutional Trader, Institutional Broker

6 Points to Consider Before Starting Your Own Forex Brokerage

Posted by Shobin Mathew Simon on Aug 20, 2015 9:41:00 AM
The foreign exchange (FX) market now generates more than $5 trillion a day, making it the largest market in the world from a volume standpoint, surpassing any other market in the world.*
Over the past few years the opportunities and successes in the foreign exchange market have attracted a significant number of investors and traders. The growth in the number of Forex brokers during this time is attributable to the fact that they have realized the tremendous revenue opportunity that is there for them when they own a brokerage rather than simply introducing clients. The increased number of start-up Forex brokers over the last decade is evidence that more and more FX entrepreneurs are finding it more profitable to run their own businesses rather than continuing to funnel business to larger brokers via traditional IB arrangements.
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Topics: Forex Brokerage, Start Your Own Forex Brokerage, SYOB, FX Broker Startup, FX Technology Provider, FX Liquidity Provider, Institutional Trader, Institutional Broker, FX Jurisdictions

4 Ways to Verify That You Are Working with a Prime of Prime (PoP)

Posted by Richard Perona on Jun 30, 2015 7:22:00 AM

Over the past few years the traditional FX Prime Broker industry has been thinning out, creating a demand for the types of services they provided. The loss of the institutional big bank Prime Brokerage services has occurred due to credit risk, small profit margin, risk aversion and new regulation. This reaction by those larger prime brokers has been clearing the way for specialized FX Prime of Prime (PoP) firms to gain market share. A Prime of Prime brokerage is a one stop shop for retail brokerages, hedge funds, money managers and wholesale traders to access top tiered global bank liquidity, cutting edge technology, cost effective rollover rates and clearing services.

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Topics: Traders, Thought Leadership, Forex Brokerage, Prime of Prime, Brokerage, FX Liquidity Provider, Institutional Trader, Institutional Broker

How to Safeguard Your Forex Funds Against Brokerage Bankruptcy

Posted by Richard Perona on May 5, 2015 9:52:00 AM

On January 15, 2015, the SNB (Swiss National Bank) caused a massive upheaval in the FX industry when they manipulated the exchange rate of the franc and unpegged their currency against the euro.
This action threw the markets into complete panic, ultimately producing capitulation with the CHF pairs and creating catastrophic losses throughout the industry. Market participants were affected across the entire spectrum, all the way from the top tiered global banks down to individual investors.
The large banks and market makers were able to absorb the losses (or major gains if B Book), but the smaller, more vulnerable, participants could not.
Some brokerages were forced to close their doors due to negative balances as a result of the losses sustained from their client’s positions. A multitude of firms such as Alpari UK, Boston Prime, Excel Markets and Liquid Markets became insolvent, just to name a few.

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Topics: Traders, Thought Leadership, Forex Brokerage, Start Your Own Forex Brokerage, Brokerage, SYOB, FX Broker Startup, Forex B2B, Retail Trader, Retail Broker, Institutional Trader, Institutional Broker