Startup broker wanting to run an a-book model with top liquidity on MT4? Here is how

Retail FX brokerages have long since emulated the modus operandi of the institutional sector, many of which nowadays provide direct access to live and highly liquid markets via aggregated liquidity from prime brokerages, that is being supplied by several Tier 1 banks.

In order to have made this possible, a series of non-bank prime brokerages now dedicate their product range to connecting the very same electronic markets to retail trading platforms as are available to professional traders, and supplying it via the ubiquitous MetaTrader 4 platform, which was not originally designed for this purpose and requires a liquidity bridge to be able to access live markets.

Specialist software providers have created an entire framework by which brokers can provide their clients with direct access to markets, many of which have integrated solutions for risk management and liquidity and order flow management so that brokerages can select which order flow to internalize and which to send to their liquidity provider.

Although this is now de rigeur, start-up or smaller brokerages still exist which operate on a b-book only basis, some wishing to branch into direct market access but have less resources to be able to capitalize such a move.

There is a way, however, that being the use of a full bridge, risk management and solutions provider which uses renowned technology yet keeps the cost down for brokerages. This particular company, based in London, is called itexsys, and in order to take close look at the firm’s product, FinanceFeeds spoke to Anton Gysbers, the company’s Business Development & Client Services Manager.

What does itexsys do?

itexsys is a London-based technology firm. We provide start-up and early stage brokers with a White Label MT4 platform supported by the highest quality technological expertise, market insight and 24/7 service. We focus on running MT4 for our clients so they can concentrate all their efforts on the sales and marketing of their business.

In essence, we offer a one-stop-shop approach for clients who want to set up as a regulated MetaTrader broker.

This means they don’t need to search around for the best software, connectivity, hosting and CRM solutions, for example, nor do they have to communicate separately with each individual company. We make the process faster, simpler, easier and more cost effective for them and can provide them with all the technology infrastructure they need to set up and grow their brokerage until they are ready to have their own license and MetaTrader server.

Which technology companies does itexsys partner with?

We have picked industry leaders including Gold-i for the Bridge, Beeks for connectivity and TradeCore for onboarding and CRM software. The key thing for us was to partner with respected companies who have worked together many times before.

MT4 is very complex and brokers who are working with four or five different organisations who have not worked together previously have an increased probability of aspects going wrong. The world of FX/CFD brokers is extremely competitive, and having a streamlined service involving the most reputable partners in the industry minimises the set-up time and provides a lot of credibility from the outset.

How do you work with your technology partners?

Gold-i is one of our key partners, for example, and we have a strong partnership with them as they have an expertise in MT4 technology which I believe is unparalleled in this industry. As part of our partnership agreement, Gold-i takes responsibility for all MT4 set up for our White Label clients, ongoing maintenance and running a 24 x7 technical support line. They provide our clients with bespoke training either on site or via WebEx.

The team at itexsys is the central point for our client and for our partners. We work very closely with both sides – with our clients to ensure we are meeting all their requirements in terms of set up and the smooth running of their technology operations; and with our technology partners to ensure that clients benefit from their specific expertise and that we are up-to-speed about the latest products and industry trends which can help our clients to meet their business objectives.

What do brokers needs to be mindful of in terms of the wider set up, other than elements such as MT4 licencing?

To operate effectively, they need to ensure they have proper hosting, strong risk management, security and superior execution. We cover off all these areas. Through Beeks, our connectivity partner, our MT4 servers are based in the key Equinix data centers such as LD4 so that our clients benefit from faster connectivity and enhanced execution.

These data centers are prohibitively expensive for start-up/early stage brokers to base their own servers in. Some start-up or early stage brokers decide to have servers outside these data centers to save money but this approach adds latency and can cause reliability issues because additional network layers and complex connections need to be set up.

We also look at business continuity. Having a single site MT4 hosting solution is also not viable. Things inevitably go wrong so it’s critical to have a reliable back-up solution in place to minimize downtime whenever it occurs. That’s why we insist on MT4 installation with servers in many locations.

Security is a major issue, too. With the growing threat of cyber security and the recent spate of DDOS attacks, we always ensure there is a layer of DDOS prevention and mitigation in place.

What kind of cost savings can be made by brokers if they choose to set up as an MT4 white label and select your technology partners to run their MT4 offering? How do costs compare to setting up MT4 with their own servers in-house?

The savings are substantial. The general rule of thumb and one that we use here quite a lot is that whatever the licence costs, times that by three to get an idea of the annual cost of running your own server. The FX industry is a 24-hour operation and therefore requires 24-hour support.

Staffing costs will vary depending on your geographic but will always be a big outlay. Recruiting staff that fully understand MT4 in-depth and are capable of supporting your MT4 environment is a must and will not come cheap. In our partner Gold-i, we have 24×7 access to their highly experienced support team who have an in-depth understanding of the complexities of MT4. Our clients benefit by having direct channels to this team and also receive huge discounts on all Gold-i plug-ins.

Server hosting, in our opinion, comes a close second in terms of outlay. You can host a server from pretty much anywhere nowadays and at little cost, but server location has a huge impact on latency and location is what costs…!!! Everybody wants servers in the main Equinix Data Centres but this comes at a premium and unfortunately not everybody is permitted. itexsys already has servers in LD4 and NY4 hosted by our partner, Beeks. Let’s also not forget that three servers are be required, Live, Backup and Demo.

How has the progress made by itexsys been since establishment?

itexsys is doing well and we regularly get very positive feedback from our clients. We have a strong pipeline and are seeing more and more enquiries from larger organisations who are looking at starting up their own retail FX offering. These are organisation who have the capital to afford their own licence but are after a quick, hassle free, all under one roof solution. We are also starting to see the fruits of our labour from attending iFX EXPO Asia in January and will hopefully be finalizing the contract soon on our first Asian client.

What are the secrets of your success?

Clients value the fact that we are an independent technology company, not affiliated to a broker, and therefore have no conflict of interest. We don’t take any rebate from the Liquidity Providers so clients can get the tightest spreads available.

Our main focus is on providing the expertise, guidance and technology support to help an MT4 broker to start-up and flourish, eventually getting them to a stage where they can become a fully established standalone broker with their own MT4 licence. Our client base consists of early stage brokers and we concentrate on what really matters to them: speed, reliability, IT support, neutrality and cost-effectiveness.

Ultimately, we want our broker clients to progress from a White Label platform to a full licence. We take great pride in helping them to grow and can assist them when they are ready to become ‘self-sufficient’ by moving clients’ historic and personal data. This is our ultimate aim with all our clients.

What are your plans for the business moving forward?

Moving forward our main focus is to expand in the Asian market. Through Gold-i, we now have support staff in Shanghai to cover that time zone so we are readily equipped to grow in the region. Offering MT5 and other platforms is always an option and is something we are seriously looking into.