Valentine Piotrovich, Head of Sales at MT4 technologies provider Takeprofit Technology, takes a look at the pros and cons of fully integrated forex broker platform solutions.
Takeprofit’s products include A and B-book risk management solutions, the Klondike liquidity bridge, and the Ashira automated dealer anti-cheating defense. Takeprofit’s clients have included Forex brokerages and white-label solution providers such as Darwinex, FXPIG, FXSTAT, BTFX, FinFX.
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For the last couple of years, there’s been a turmoil on the retail FX market. As the big names are consolidating in Europe and US, new brokers emerge from Middle East and Asia. Following the shifts in the market landscape, technology providers also change their offering. Many of them promote new large scale products which are designed to fulfill multiple purposes at once or provide control over several parts of broker’s platform: STP bridge, dealing engine, back office, website, CRM and others. Such products are also known as ‘fully integrated solutions’. The idea is great and the features are appealing, but are these products as good as they look on paper?
How it all began
The concept of deep integration through various components has been around for a while, but it skyrocketed with the boom of smartphones and gadgets. Having access to everyday functions of personal computers in your pocket made them invaluable in everyday life. As the software behind gadgets got more advanced, it also allowed interconnection between different applications so you could get benefits of using them at the same time.
Since then the technology giants, Apple and Google delivered alternative visions of the whole software environment, also known as ecosystem. While Apple thinks about everything from A to Z, Android has a slower, do-it-yourself approach. If you’re using Apple then the developers have already chosen an application which carries a certain goal. On the contrast, Android users can choose from a plenty of options and rely that it would fit their setup.
Inspired by the accomplishments of the industry leaders, brokerage software providers decided to replicate the concepts in their own products.
The flying start
As the brokerage businesses expanded, the overall complexity of their systems increased. Each new service, tradable asset, platform, liquidity provider, branch in a different regulation — everything has to be planned and considered from a technology point of view. That’s where fully integrated solutions came in handy. Nowadays there are products on the market which allows you to control A/B book execution in one interface, aggregate liquidity from several providers on your own MT4 server, manage your clients within a single CRM integrated with brokerage website and sales tools. This allows the broker to reduce staff expenses and automate the routine work. For startup brokers there exist one-stop-shop offers, when one provider would handle everything from license to website and liquidity.
Yet with all advantages lying on the surface, some brokers prefer more conservative, hands-on approach. What makes them think so?
Pros and Cons of Fully Integrated Solutions
| Pros | Cons |
|---|---|
| Unified control panel | Complicated architecture and configuration |
| Routing of execution flow | Reduced stability and speed |
| Extensive list of features | Higher purchase and upkeep cost |
| Incorporation of ’best practices’ from provider | Inability to replace the components on-the-go |
| Ties broker to a single technology provider |
The pitfalls
One of the main concepts in software development is that stability of the whole system is inversely proportional to the amount of its components. The simpler you make the product, the more stable it will perform. This basic rule applies to fully integrated solutions in the best way possible. Most of these solutions consist of several components, some of them are installed on multiple servers. This brings numerous questions into consideration: overall speed, compatibility, connection issues. Some parts can only be managed by a technology provider, which means that the brokerage does not have full control over its platform. Moreover, maintenance and upkeep of such solution is much more difficult and costly.
Imagine a situation when the broker bought a set of integrated products from one provider, like trader room + CRM + back office. Everything looked good until his regulator introduced new policy or reporting. All over sudden one of the components has to be replaced and there’s no quick solution because the provider did not think through the standalone compatibility of each component. It only worked when everything was provided by one company.
Better safe than sorry
It is often said on the technology market: “Do not reinvent the wheel”. The providers who rely on this point consider their fully integrated products as the Next Big Thing in FX technology. But remember that one size does not fit all. Before making a decision, consider how flexible is a particular product, how scalable is it to perform one year from now and how will it behave when the unexpected happens. These questions will eventually help you to define your own understanding of your needs and help you to improve your business.