FinanceFeeds Podcast Ep.#10: Advanced Markets’ Aratovskaya on credit, MT5, pre-hedging

Rick Steves

The tenth episode of the FinanceFeeds Podcast hosted by our Editor-in-Chief Nikolai Isayev is out. On the other side was Anya Aratovskaya, VP of Institutional FX at Advanced Markets Group, the provider of Direct Market Access (DMA) liquidity, credit and technology solutions to the foreign exchange, energy, precious metals and CFD markets.

FF podcasts Anya Aratovskaya

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Anya Aratovskaya told Nikolai how she entered the FX industry. “I thought FX trading would help pay my student loans. One day, when I was loading the MT4 platform, I noticed “FXCM, powered by Boston Technologies” and I immediately thought “I’m in Boston. It would be brilliant to work with them. It should help me with my trading”.

After a short internship, Boston Technologies extended a full-time job offer.

That was in 2010, where she joined as a B2B Marketing Specialist and eventually became an Operational Risk Analyst while playing the role of Sales Account Executive up until April 2015, where she moved to the joint venture of California based Technology provider Fortex and Charlotte, NC based Prime of Prime Advanced Markets.

Advanced Markets is an ASIC and FCA regulated FX, Metals, Commodities & CFDs Liquidity provider backed by Macquarie and GFI Group. Offering deep liquidity (200 million depth for EURUSD) and transparent STP execution, its solutions are powered by sister company Fortex, offering an aggregator, MT4 bridge and back office with 100ms execution time and real-time hedging.

MetaQuotes remains the leader, no matter what

Anya and Nikolai browsed a number of topics, including pre-hedging and the suspension of MetaTrader 4 and MetaTrader 5 from the Apple Store. About the latter, she has no doubt the current issues with the mobile apps are temporary and that they have exposed brokers to the downside of being too reliant on MetaTrader.

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“One thing I’m positive about is that MetaQuotes will overcome these issues one way or another.  On the bright side, retail brokers are finally becoming more proactive in adopting new trading platforms”, she said. “I’m a firm believer that healthy competition is necessary for the industry. Hopefully, we’ll see a more diverse choice of trading platforms.”

The Advanced Markets executive added that she has created a very detailed comparison of what’s available on the market and anyone interested is welcome to contact her and she will share the list with all the details, pricing, etc.

The new momentum among brokers is not about replacing their mobile offering, but to add alternatives. The more the merrier. Still, MetaQuotes remains the leader, she reiterated.

“No matter the issues they’re experiencing now, no one can really fully compete with them whether in servicing white labels or multi currency accounts”, said said, adding that Advanced Markets is well prepared to help brokers switch platforms as they are currently integrated with all of the ten platforms that can be compared to MT4 or MT5. Clients can choose and go live “next week” (as long as they are approved by our compliance)

Pre-hedging is not front-running but it’s hard to prove

Anya Aratovskaya has recently published a post on pre-hedging practices in institutional FX in order to clarify the matter at a time when ESMA prepares to publish its final recommendations following a consultation and a number of suspicious transactions and orders reports (STOR).

Pre-hedging served as the next topic to cover with Nikolai. She first explained the difference between front-running and pre-hedging, which at some point comes down to intent. Front-running is not legal, while pre-hedging is allowed as an exception rather than the norm. “I would agree with this statement.”

Pre-hedging is the practice where a liquidity provider takes a hedge position in anticipation of an upcoming trade. The goal is to provide the requested price for the client, minimize risk of market impact and help LPs to mitigate their own risk.

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“However, I don’t see how LPs can track and report every pre-hedging transaction they do or how they can predict it will go in favor of the client, or how they can prove the good intent of pre-hedging. it is hard to justify”, she added. “I’m curious as to how they will structure their final recommendation.”

The episode also covers the shift in institutional FX where Tier 1 players are exiting the prime brokerage space, with recent events speeding it up. Cash rich companies with decent balance sheets will take the opportunity but it has risks as the institutional business has tighter margins and risks involved. Advanced Markets is in the position of extending higher credit lines to select institutional clients, which is something that many venues can’t do.

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All previous episodes of the FinanceFeeds Podcast are available on all popular streaming audio platforms.

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