Category Archives: Retail FX

Margin FX Brokers Flock to Integral for Flexibility, Control, Time to Market and No-Money-Down Solutions To Run Their Own FX Business

This week’s news about Alpari partnering with Integral highlights a larger trend: Margin FX brokers are choosing Integral as their business solutions provider. The combination of access to liquidity, rapid time to market, no upfront costs, the flexibility to pursue the business model of their choice and the assurance to have all key elements under their control is hard to beat.

As a neutral technology provider that offers a fully managed end-to-end solution, Integral offers a unique value proposition that resonates with our customers.

It’s a technology arms race

Global foreign exchange markets have become a very competitive business and in it managing a margin FX brokerage is no exception. Therefore, having the right partner at your side is extremely important.

We invested in technology solutions complete with a network of liquidity providing banks, ready today and available for margin FX brokers to build their own private FX exchange, and to deliver branded trading services to their retail customers.

The power of cloud computing

All our services are delivered in the cloud, offering the advantages of this business model such as dramatic cost savings through a shared technology platform, on demand services that scale elastically in line with our customers’ business needs, and a pay-as-you-go business model.

Since we don’t charge any up-front costs, we only get paid a small token every time one of our customers executes a trade. This is very different from the traditional purchase-and-install software model and ensures that the interest of both Integral and its customers are aligned.

We work with margin FX brokers to assist them in assembling their own liquidity from multiple banks. If those banks are already on Integral’s FX Grid® – and many are, then established connections are in place. Connecting once to Integral is all that it takes to be ready for connecting to other participants. In the rare event that a connection doesn’t exist yet, Integral will research the particulars of that situation and even build it on behalf of our customers.

As importantly, we will ensure that these connections continue to stay up and working. We’ll track the many changes that the liquidity providing banks make on their end and ensure that service to our customers is not interrupted. It all contributes to the high availability of our trading network.

You are in control

Our various cloud services add up to an end-to-end solution that includes everything FX brokers require to run their own business. Since it is delivered a la carte and not as a fixed bundle, brokers can pick and choose. They end up with everything they need and nothing they don’t. That includes the option to take advantage of FX Inside Professional™, our execution management system (EMS) for the broker’s professional customers.

Since nobody knows their business better than they themselves, we offer our broker customers real-time analysis and administrative tools so that they are in full control of their FX business. That way, they can customize solutions that specifically fit the needs of their various customers.

A new reality

The time of one-size-fits-all solutions in FX is over. FX market participants demand a technology solution that fits their business, not the other way around. They further require the tools that put them in control of their FX business. Integral understands and supports this trend. Our rapid customer growth is testament to the fact that what we offer resonates with the market.

Ten Questions

1. What is the biggest change you have seen in recent years in FX markets?

The biggest change must be how technology has lowered the barriers to entry for many new market participants to enter and thrive in the global foreign exchange market. What was previously an extremely fragmented, disconnected, opaque market is transforming into a more diverse, integrated, and transparent market.

2. People are talking about a technology arms race in FX. With that said, does anyone other than the largest and best capitalized players stand a chance to compete at all?

Yes, it is true that in order to compete and win in this competitive FX market, one must make use of very capital-intensive technology infrastructure. It does not mean, however, that one needs to build and own that infrastructure themself. The Integral shared platform and the cloud services are on par with or better than any other technology solution out there, at a fraction of the price and with far less risk. The game has changed and as in other industries, the introduction of a shared technology platform has dramatically leveled the playing field.

3. What is your advice for market participants with large off-line or telephone-based businesses who are considering going on-line?

The good news is that today’s technology can deliver discrete functionality similar to what human traders or salespeople can do. Integral has a track record of helping banks and brokers launch their own FX platform, basically for free and with very little risk. It can happen with no capital expenditures on their part and can be deployed in a matter of weeks, because they benefit from the pre-existing connections with all major sources of liquidity and prime brokers that we have aggregated over many years. And, given that they have no ongoing fixed expenditures, they have no running costs to worry about. So why wouldn’t they go electronic now?

4. How is Integral different from other technology solutions?

We are a neutral service provider. We are not and will never be a bank or a broker, nor do we transfer the risk of a successful implementation to the customer. While this seems like an obvious distinction, it carries many ramifications that may not be as evident. The biggest difference to the traditional license-and-install software vendors is that we enter into true partnerships with our customers. The basic reason lies in the way we are compensated: Integral charges a small service fee on any trade our customers execute on our platform. If customers are not trading, we are not getting paid. If customers are not happy with the system, we are not getting paid. Therefore, our interests are fundamentally aligned for the short and long term. We want them to be successful and to expand their businesses.

5. What is your position on the discussion around platform proliferation?

I think that these new platforms are a great addition to global FX markets. Actually, they are a great indication of the technology revolution that has been taking place over the last few years. Today, technology has advanced to a point that mass customization is now practical and economically feasible. Modern cloud-based service offerings, like Integral, can automate what you have exactly the way you have it. What we are witnessing is that many off-line FX businesses are moving online by embracing e-FX. It’s a trend that we applaud and one that I think will continue.

6. With lower volumes, regulatory pressure, many new competitors, is this a good time to start your own FX brokerage?

If you have a solid business idea, if you are committed to great customer service, and if you’re marketing organization is top notch, there has never been a better time to venture out and compete in FX. There is more transparency than ever, the barriers of entry are lower than ever, and with the right technology partner, you can focus like never before on customer service and acquisition. If you have any questions, give us a call so we can discuss your opportunity in more detail.

7. What is cloud computing and how can it help me?

Cloud computing is a new paradigm that has dramatically changed many industries, including FX. Its key characteristics are the use of a shared IT infrastructure and a pay-as-you-go business model. Previous static technology products with fixed functionality have been replaced by flexible cloud services that you subscribe to on an as-needed basis. What all that adds up to is a business model with virtually no fixed costs, no CAPEX, and the built-in flexibility to change as your business needs change.

8. Where do see the future of white labeling?

Generally speaking, I see a bright future for white labeling, but it will be slightly evolved. Clearly, I don’t see many new proprietary platforms emerging that are not in one form or another based on a common underlying technology. In light of the quality of technology solutions that are available already, it just doesn’t make sense given the costs and time required to build something from scratch. I am hesitant to call this ‘white labeling’ since it is so much more. White labeling, how it came to be understood by most people, describes the licensing of somebody else’s technology platform and somebody else’s liquidity – without any real chance of making it your own. The new kind of white labeling, how we understand it, puts the business owner in control of key elements and allows for far-reaching customization of the technology tools to fit that business owner’s preferences. FX has come a long way from the one-size-fits-all white-label offerings from years past.

9. What is your position on the principal vs. agency business model?

The debate in the market is sometimes very heated, with different people making absolute statements for or against either one. In my view, both models have their respective merits. Our platform supports both, and at times even for different customer segments under the same brand. And that is the best news: You don’t have to take sides. In the end, your customers will tell you whether they want what you’re offering. And if not, and if you are one of our customers, we will help you adapt to better serve their needs; because that is the most important debate of all.

10. What has been your proudest achievement as CEO of Integral?

The fact that we helped launch more than 200 and counting FX platforms that are all unique, customized businesses that vary in market structure, value proposition, target audience, user experience and business model, all branded under the name of our customers. As far as I know, no one other than Integral offers technology that can support the variety of platforms on a single virtual SaaS system. That’s where we think we have accomplished something that fundamentally changes the economics of the FX service provider market. This is not unlike the effect that the introduction of Lotus 1-2-3 and MS Excel had on the financial software market: One system, provided by a technology vendor, extremely customizable, with virtually unlimited applications designed by and “owned” by the customers themselves.

PS: If you’re interested in the business of margin FX trading and want to learn more about what Integral can do for you, click here.

TrueFX.com — The Way FX Is Supposed To Be

You might have heard already about our most recent initiative, the launch of TrueFX.com. We are very excited about this project! I would like to take the opportunity to highlight some key aspects that that might have gotten lost in the initial media coverage.

What is TrueFX?

TrueFX is Integral providing retail FX brokers with direct market access to the interbank FX market. This is a disruptive move in the tradition of other Silicon Valley companies, using more-advanced technology solutions to fundamentally change a market for the benefit of everyone in it. More on that later.

On TrueFX.com, market participants will find streaming real-time tick-by-tick data of all major currency pairs for free. We are also publishing historical market data, again tick-by-tick at no cost. We believe that this will to some extent change the way foreign exchange markets are organized. I encourage you to register to get full access to everything www.TrueFX.com has to offer.

The disruptive but benevolent nature of TrueFX

While some brokers already have embraced TrueFX, it is a disruptive move and here is why: In today’s retail FX world, brokers often face a conflict of interest because it is so easy for them to trade against their customers and make extra money. For some it proves to be too big of a temptation as too many lawsuits illustrate bear witness.

We are convinced that at the end of the day, most everyone will be better off with TrueFX. On the TrueFX platform, when a customer trades against a broker, that broker immediately and in real time offsets that price directly against the TrueFX price. That TrueFX price is immediately and directly executed against the market, against the aggregated liquidity from major market banks. And since their price is always in competition with other banks, they can’t skew it because another bank might take the deal.

By handing over trade execution to a neutral technology provider, everyone wins. Market making banks who were always hungry for retail flow, love the exposure and easy access TrueFX offers them. Brokers are supportive because instead of working with a larger broker (and a potential competitor), they now get direct market access by working with a neutral third party. Plus, their customers get better prices and service, which enhances their competitive standing.

I call TrueFX a disruptive but benevolent move because it is hard to imagine strong criticism from anyone other than brokers that (ab)use the current system by acting as a market maker and broker in unison. As such, they are not acting as a neutral agent that is providing customers with best execution. The way markets are organized today, there can be a strong conflict of interest because brokers can influence currency rates to their advantage and, if there is no transparency, most customers will never know that they were taken advantage of by unfair business practices. Continue reading TrueFX.com — The Way FX Is Supposed To Be