Markets Direct at FIA EXPO 2022: Traders know what they want from brokers

Rick Steves

The FIA Expo 2022, one of the most prestigious events within the global derivatives trading industry, took place in Chicago on 14 & 15 November.

The derivatives ecosystem gathered at the Sheraton Grand Chicago Riverwalk to discuss the most prominent topics, including the unexpected collapse of FTX. Attendees also took the opportunity to flock to the exhibit hall for the betterment of their networks and businesses.

There, FinanceFeeds spoke with Tom O’Reilly, Director of Business Development at Markets Direct, the multi asset platform offering FX, Futures, ETFs, US equities, and Crypto currencies.

Markets Direct’s flagship product is the Gateway Hub brings together both Cash Equities, Futures, and OTC markets – in a single cross margined account, including exchange-traded products, with more than 3500 listed stocks and ETFs.

The platform offers commission-free and fractional share trading, allowing to utilize 50% margin on stock portfolio to trade FX, Futures, and Cryptos, and customize asset offering to include regional Futures exchanges and local shares. Corporate actions, dividends, and IRS reporting are all handled by Markets Direct, a platform designed to attract high net worth and active traders and investors.

The gateway hub features full depth of book on Futures and FX and easily connects with the most popular front ends, including MT5, Netdania Mobile, CQG Desktop, or via FIX to custom front ends.

The interview with Tom O’Reilly covered what traders want from online brokers, the rise of multi-asset trading, macro trends, and the offering for FX brokers.

The global picture today is quite different from the pandemic. What do traders want from their brokers in 2022?

Even well before the pandemic, but certainly after, traders as a group have become much more knowledgeable, more savvy, and consequently more demanding – as they should be. They know what they want from their broker. If they don’t get it, they will move on. There’s a lot of good competition out there.

I’ll put myself the client’s shoes. These days those shoes are often worn by a new class of traders from GEN Y or Gen Z. I’ll check out one of the many broker review sites or rely on recommendations from friends. After choosing my broker, I’ll go to their website to open my account. I would look for a quick, seamless and comfortable experience in the account registration process. With many brokers today you can get an account opened, approved, funded and live in a very short period of time.

Here’s some other considerations:

  • Friendly, knowledgeable, and accessible customer support
  • A competitive dealing environment
  • A stable and reliable platform that includes a very good mobile experience
  • Quick deposit and withdrawal process
  • Optimal speed of trade confirmation
  • Low cost trading
  • News, education, research and trading tools
  • Global access to stocks, futures, currencies, bonds and options

The pandemic fueled the rise of multi-asset trading with an added focus on equity futures and options products. Will this trend continue in the near future?

Not only will this trend continue, but I believe it will grow and thrive, with more and more participants. As a result of the pandemic and government mandates, for the first time people were confined to their homes. This in turn led to a significant increase in internet usage, and not surprisingly a whole new network of traders. With access now to fractional share, low cost on-Exchange and off-Exchange markets, interest in trading for an income skyrocketed, and a growing trend emerged, that of embedded investing. The lines can be somewhat blurred, but the retail sector has combined trading with investing. I don’t know of many college students who don’t have a Robinhood or similar account. I believe the pandemic accelerated a move away from single product platforms towards access to multi-asset platforms, and this trend will continue. Along with this came a renewed interest in equity futures and options. The learning curve for both newbie and experienced traders has definitely expanded, especially during the pandemic. Many colleges and universities are now offering courses in equity markets, investment trading, and options trading to their finance and economic majors. Several of my ex-bank trader friends are now professors teaching trading courses at universities.

What risks do brokerages face from interest rate pressure?

From a macro perspective, fears of rising interest rates tend to be periods of low economic growth, which translates to economic contraction. There will be ripple effects where eventually everyone is affected, including brokerages. Stimulus money provided during the pandemic provided a boost in trading account margins, but this phased out to where there is now less available cash and less borrowing. With the rise in global interest rates inflation is a real concern for most families.

Rising interest rates can also add to volatility. Volatility is generally good for brokers. The flip side is that rising interest rates often cause asset prices to go down. As a general rule, people tend to acquire or buy assets, including stocks. They see their 401K and trading accounts take a big hit, and there is always a danger they will get frustrated and abandon these accounts, at least temporarily.

What is Markets Direct bringing to the fore this year?

Markets Direct picked up early on traders’ desire to be able to trade multiple assets from a single platform. It has succeeded in combining on-exchange products like US listed stocks and futures with OTC ones, effectively a marriage of the two. Previously this required more trader real estate – watching separate dealing platforms and opening and maintaining several accounts. Clients can trade fractional shares in over 3000 listed US equities, Futures like mini S&P’s and FX, all on familiar platforms that Markets Direct offers, such as Metatrader 5 and Netdania.

Markets Direct is a B2B product. We offer our multi-asset solution primarily to forex brokers. We’re convinced that by offering a multi-asset product, traditional FX brokers can greatly expand their client base and revenue streams by casting a much wider net, and tap into the imbedded investing trend that I discussed earlier. The broker can choose to keep their core FX flow in-house or access our liquidity.

Looking ahead in the near term, we’ll continue to focus on and work with forex brokers globally and look to expand to other fintech providers as well. We’re also adding access to more local futures and equity exchanges, including Hong Kong and Europe. As we continue to improve and add enhancements, we believe we’ve built a product that can be very appealing to both brokerages and to their downstream clients.

(For further information about Markets Direct please contact [email protected])

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