Thinking of upgrading from a generic FX platform? Why it pays to look closely at the options…

Thinking of upgrading from a generic FX platform? Why it pays to look closely at the options…

There’s no escaping the fact that off the shelf trading platforms like MetaTrader’s MT4 have been a huge success, introducing millions of retail clients from every corner of the globe to the FX market over the last 15 or so years. However, many brokers are now finding themselves under increased pressure to upgrade and whilst new iterations certainly provide added functionality, subscribers would be well advised to ensure they explore all the options on offer. Critically, can the white label provisions offered by some of the world’s largest brokers provide a more appropriate solution? Technology has come a long way in recent years, meaning that end-user clients have ever more choice, so selecting the wrong platform now could prove expensive, not only in terms of the increased administrative burdens, but also when it comes to customer satisfaction and retention in the longer term.

Multi-asset opportunity

The next generation of trading platform is designed to cover far more than just FX pairs, instead accommodating a wide range of additional assets as CFDs such as indices, commodities, treasuries, equities and cryptos. But for each different symbol added to a platform, brokers need to carefully consider their obligations when it comes to providing an appropriate level of support. As an example, corporate actions on equities such as dividends, stock splits or consolidations require a significant level of administration to ensure client positions are recorded correctly. A generic platform leaves this liability with the broker, whereas products such as CMC Markets Connect white label platform come with a complete support package removing the burden for the broker and ensuring accuracy on every transaction. Equally, when adding assets priced off exchange-based transactions, using a generic platform means there’s a need to negotiate market data agreements with each exchange individually – something that a white label provider like CMC Markets Connect will simply bundle as part of the service.

An abundance of choice

With more than 10,000 different instruments commonly accessible to retail traders, brokers face a significant challenge when it comes to understanding just what they should be offering. After all, each line added means extra data costs and also the need to provide additional risk management oversight. Expert guidance from a trusted and established white label provider can prove invaluable when making these decisions, guiding the broker as to what combination of assets makes for an efficient mix, whilst also being able to easily facilitate the addition of trending instruments when client appetite shifts.

Aren’t white labels expensive?

Common perceptions are that white label platforms may provide all the features and functionality both the client and broker could ever want, with this being reflected in the price tag. However, the white label approach offers an unprecedented level of transparency when it comes to costs as there’s just a single relationship to consider with no additional fees to third parties such as data or bridge providers, whilst with CMC Markets Connect, the necessary technology is all hosted on institutional-grade servers. There’s administrative and technical support in with the deal, whilst significant volume discounts are also seen as a key part of the proposition.

Let’s not forget about the customer…

The legacy generic platforms have perhaps succeeded by virtue of their simplicity. With limited functionality on offer, bandwidth requirements were commensurately low meaning even slow internet connections in rural locations could support these services. However, tech innovations, better mobile connectivity and the explosive growth of trading tools all mean that there’s increased demand for platforms which come complete with a wide array of products already included. Whilst these can be sourced then bolted on to a generic platform, that means additional cost, a need to provide adequate training and support, and the fact that such extras risk not providing the comprehensive coverage today’s trade expects. Again, taking an established white label platform such as the one offered by CMC Markets Connect. This is the product of over £100m worth of investment and has already gone through an exhaustive user experience testing process, meaning that brokers can be confident that they’re left providing a truly best-in-class product. Human nature is such that individuals are naturally averse to change so it’s critical to do everything possible to ensure client retention when the need for an upgrade arises.

The current round of platform migrations we’re seeing are likely to be close to once in a generation moves. Brokers have a choice, but they also have a duty to both their customer base and their own shareholders. Taking what looks like the easy choice here and simply swapping to the next generation offering from the same provider could see costs increase, clients left disillusioned and in turn shareholders wondering why the potentially significant expense incurred isn’t yielding quick dividends as a result.

 

CMC Markets Connect is the institutional division of the online financial trading company CMC Markets. Headquartered in London, an institutional hub for the APAC region runs out of its Sydney office, with further satellite operations in Singapore and Beijing. By locating in the same time zone, CMC Markets Connect is ideally placed to provide timely support to institutional clients whenever the need arises.  

For more information on CMC Markets Connect liquidity solutions and tailored trading technology, including white label and grey label partnerships in the APAC region, contact Andrew Wood at a.wood@cmcmarkets.com.