“Consumers are much more demanding these days, therefore by providing a multi-asset service, brokers can capture additional volumes and help retain clients by being a one stop trading shop” – Ricky Strachan, Gold-i
Technological input within the retail FX business can in some respects be rather incestuous, especially when considering the very specific nature of connectivity and integration software that is required to provide retail brokerages with vital connectivity to venues and liquidity providers.
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#1 Best Trading Software Nowadays, with retail traders requiring increasingly similar trading environments to those utilized within the professional trading desks of New York, Chicago and London, it is imperative that brokerages are supported by technologists who can provide much needed differentiation and increased functionality, hence seeking expertise from the institutional trading sector is a progressive step.
For Ricky Strachan, the ability to bring substantial commercial experience from the enterprise software sector to the retail FX industry’s online brokerages and subsequently their client base, an ideal opportunity is presented.
Mr Strachan joined British trading systems integration specialist Gold-i in March this year, and to gain perspective on his methodology and background and how this will translate into improving the systems that are available to retail FX brokerages, FinanceFeeds met with Mr Strachan at Gold-i’s head office in Guildford, Surrey, about 25 miles south of Central London, this month.
Mr Strachan joined Gold-i just over 5 months ago, from IRESS, which is an Australian software company specializing in the development of software systems and services for financial markets and wealth management, where he had been based at the company’s UK division. “IRESS is very well established in Australia and has a large presence in South Africa, the United Kingdom and Canada” explained Mr Strachan.
Based in Manchester, Mr Strachan’s home town, whilst at IRESS Mr Strachan explained his career path which led him to IRESS, which included a nine year tenure at London Stock Exchange. “Straight out of university I landed a position at London Stock Exchange, as they had had an office in Knutsford, which is a suburb of Manchester. I worked within a department called ProQuote, designed by a former trader.”
Proquote was a market data vendor and retail trading provider in the United Kingdom which London Stock Exchange sold to IRESS in September 2015, at which point Mr Strachan moved to IRESS post acquisition.
“At that time, London Stock Exchange closed the office down, so I relocated to London, where I lived for 3 years, and was based at the London Stock Exchange’s world renowned Paternoster Square headquarters. These were absolutely great years. Going into the London Stock Exchange every day is fabulous. I was exposed to a lot of capital markets, numerous brokers both institutional and retail but started on a technical helpdesk before being promoted to account management, where I was looking after Hargreaves Lansdown, TD Waterhouse, Interactive Investor, Share Center, in total managing 100 accounts” – Ricky Strachan, Account Executive, Gold-i
“Whilst that appears to be very much an ‘at the coal face’ environment, once I had been there a while it was not daunting. I got to know the dealers very well, which in itself was a great exposure. After nine years at London Stock Exchange, my department was then acquired by IRESS and I moved over to IRESS and relocated back to Manchester as Regional Account Manager, managing some of the biggest brokers in the UK” said Mr Strachan.
“I would say that capital markets is a different world compared to FX as there are fundamental differences between equity trading and FX. However with the increasing regulatory requirements and technological developments in the FX world is moving more and more towards stricter governance and more into a genuine multi-asset environment” said Mr Strachan.
“Being quite new to FX, the FX world seems to be in a stage of transition, and there seems to be a gap in the market to help brokers overcome a number of regulatory changes which I think Gold-i is well positioned to assist with” – Ricky Strachan, Account Executive, Gold-i
“Gold-i is very well positioned with our Matrix Insight analytics tool. With this, brokers can put clients into the best execution model” enthused Mr Strachan.
“Consumers are much more demanding these days. The retail brokers need to compete with each other, and the only way to do so is to differentiate. If you can become multi-asset, your brokerage can capture and retain more clients by having a one stop shop” said Mr Strachan.
Differentiation is indeed vital, and something that FinanceFeeds has reported on extensively, in that it is not only required for commercial survival, but to progress business to an elevated level and generate sustainability.
The reality is that in today’s retail FX industry, where the end users have become ever more sophisticated and can absolutely tell if a broker is surviving from their deposited capital instead of connecting to a live market, which has exponentially improved the standards in terms of execution of trades within many medium sized retail brokerages, however it has left a conundrum, that being the completely outmoded marketing model which is not compatible with the commission business that brokerages offering genuine market execution now provide.
Most importantly, however, aside from the 1231 near-identical MetaTrader 4 retail entities that currently exist, is that the execution model required nowadays means that brokers should do what brokers are supposed to do – charge a commission for processing trades to their liquidity provider and provide their clients with an aggregated price feed consisting of prime of prime liquidity from Tier 1 banks and non-bank market makers.
This is excellent for customers if conducted correctly, but means that brokers pay a dollar-per-million charge for their liquidity management system and market liquidity, and can charge a commission rather than have the vast margins that had been the case within so many smaller brokerages several years ago which resulted from the profit and loss model that many operated.
The brokers that came to market in the middle of the last decade with a profit and loss model (living from client losses) were never able to gain market share among quality jurisdictions where the established competition was already operating a good quality trading environment for clients – and rightly so, nobody laments the passing of firms which do not have their customers’ best interests in mind – instead coming from the affiliate marketing and media buying sector.
The quest for differentiation may also lead to the in-house development and maintenance of proprietary software despite the obvious costs because in addition to promoting their own platform to their clients and increasing the rate of client retention as they grow accustomed to an environment they will not likely find elsewhere,
Simply, buying leads and hoping for sales calls to convert them into live clients when there are 1231 identical offerings is futile.
“In terms of Next Generation trading systems, such as the Gold-i Matrix, we are looking to support any platform including proprietary software in regions such as Japan, where proprietary systems are favored over MetaTrader 4 or 5, but are still connecting to our platform” said Mr Strachan.
“Traders should be emulating the professional desks. If clients are sophisticated, the head dealer should be too. The business has got to move with the times, and I’m glad that the FX world is heading towards more governance, better technology and tighter regulation that protects consumers” – Ricky Strachan, Account Executive, Gold-i
“Head dealers should not fear change, but instead embrace the technology Gold-i can provide. The options are endless with our Matrix solution and it can provide brokers with a seamless multi asset, multi venue, hosted solution” said Mr Strachan.
Mr Strachan said “In key markets like Australia, the FX industry is very well established and well organized, but the brokers need variety and appropriate local support. There are also a number of opportunities in surrounding areas such as Singapore. The Singapore government is very keen to make this region the biggest FX hub in South East Asia and this definitely is an area we would like to invest in.”
“Malaysia is huge now, particularly because many Chinese firms are establishing there as a method of accessing the entire world’s customer and liquidity base, along with rapidly growing neighbors such as Thailand” said Mr Strachan.
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