The pace of eFX platform innovation has been dramatic over the last few years and consequently Retail FX clients can look forward to the benefits of their advanced features and functionality. Are customers driving this rapid pace or are providers trying to differentiate themselves by continually raising the technology bar?
Nick Bang: As the market expands and competition becomes more intense, online fx providers that wish to remain at the top have no choice but to constantly add new features and functionality and generally improve their platforms. It is definitely customer driven, just consider where retail spreads were 3 years ago and where they’re now pratically the same as institutional spreads. The race to attract more customers is more aggressive now than its ever been.
What sort of basic functionality and standard tools would typically characterize today’s entry-level? e-trading platform?
Nicholas Bang: Today any worthwhile platform directed to even the smallest customers offers a full range of functionality. Not only execution and position monitoring but integrated order placement & monitoring, real-time statement generation, real-time charting, news and analysis. Additionally demand is so varied now that customers on an international level have begun to require trading platforms translated in their own language. At ACM-REFCO customers have our platforms available in 14 languages.
Many retail investors are now extremely active. What type of specialized features are these more active, professional traders likely to be looking for from their online platforms?
Nicholaos Bang: Active traders essentially seek two things above all else: the tightest spreads available and reliable, rapid and liquid execution. Good trading conditions are simply the main requirement of the active trader which of course stands to reason. Extremely active traders however are not necessarily the most professional though.
Can you give us some examples of how your own trading platforms are being developed and customized to cater for the differing trading styles of clients?
Nick Bang: At ACM-REFCO we essentially offer the most competitive trading conditions from the smallest customers upwards which allows for all sorts of trading styles. We constantly re-assess our technology and have a keen eye as to what the competition is offering so we’re constantly improving our platforms. One example is the upcoming development of our new greatly advanced charting package which should be available in a few weeks from now.
In what way can e-trading providers leverage technology to maintain and improve their client relationships? For example, by improving services such as technical analysis?
Nicholas Bang: That’s a good example. Customers are increasingly demanding. Whether its a more advanced technical analysis package or other features, and online broker must constantly improve technology and services in order to keep let alone increase market share.
Offering robust technology, consistent liquidity and fast execution is clearly crucial in being competitive and acquiring new clients. But how important are value-added services such as 24 hour trading support, multilingual trading and IT support going to be in maintaining client loyalty?
Nicholaos Bang: The latter tend to be almost as im portant as the former. Obviously frequent traders need good trading conditions above all else, but that is not necessarily the case of non-frequent traders who can nevertheless be sizeable customers. Most online brokers tend to neglect customer service, dealing desk availability and the multilingual element because these aspects of our business can be quite intricate to manage correctly and require inculcating a strong sense of responsibility and a well defined corporate culture within the firm. Strong customer support in all areas and a multilingual, global approach to customer acquisition in my opinion is just as important as effective execution and will ultimately attract the better, larger customers but one cannot afford to neglect any aspect of the online execution business.
Some online trading providers license their technology whilst others have developed their own proprietary trading platforms. What advantages do clients gain from using a proprietary platform?
Nick Bang: Clients using a proprietary platform will tend to have slightly more competitive execution and faster technical support. Both our platforms are proprietary.
Providing Institutional services has become a major growth area in the retail FX environment. What are clients likely to be looking for when choosing an FX firm to handle the trading and management of their accounts?
Nicholas Bang: Some brokers offer money management services to their clients. We believe that an online broker must focus purely on providing execution and everything surrounding that core business in order to be good at it. We offer money manager percentage allocation platforms but they’re meant to be used by external money managers that partner with us. Customers looking for money management services should consider a long term audited track record which shows consistent profitability.
In what way do you see e-trading platforms evolving in the near future to meet the needs of more demanding and sophisticated clients such as Hedge Funds who may use AP1’s and have trading styles involving automated and Algorithmic trading systems?
Nicholaos Bang: API integration is definitely something to look at in the future, but integrating an API in an effective way (which will provide consistent, liquid execution) is easier said than done. We believe that white labeling is structurally much more reliable and effective than API integration. With a white label partnership a bank or broker can became an online fx provider overnight at no cost and at no risk, effectively tripling or in some cases quadrupling their customers’ trading volumes. We specialise in white labeling on both our Java and .Net platforms. Of course API integration and WLPs cater to different market segments and both will undoubtedly play a solid role in the future.
What sort of new technologies, for example mobile communications and voice recognition, are likely to play a key role in the next level of eFX trading development?
Nick Bang: Offering mobile telephone trading is undoubtedly one of the winning strategies in the future but to reach full effectiveness, foreign exchange will have to become more widespread as an investment choice for the wider public. This is not yet the case but could very well be a few years from now.