At an opportune time, multi-product platform diversity is becoming a key focus in retail FX – Exclusive interview
“Given the recent developments with FXCM, the migration of OTC FX to an exchange looks to be more possible than ever before. DirectFX is well connected to many key individuals in the US trading industry and is well positioned to pivot and benefit from such a development if that should occur. ” – Tim Gilroy, Head of Platform Services, Direct FX
There could not be a more poignant and timely juncture at which to go down the true multi-product route than right now, this week’s astonishing unraveling of FXCM’s North American business as a result of trading against its customers via a very clever means having decimated the firm and cast a shadow over the OTC derivatives industry.
That shadow is a somewhat unwelcome one, especially considering that the US retail FX market is widely recognized as the most organized and sensible business environment in the world alongside that of London, and that it had been unfathomable to even the most seasoned industry professional that a publicly listed, NFA regulated giant such as FXCM would commit several years toward misleading its customers into believing that they were trading on an agency basis, when all the while the firm had an interest in a secondary market maker which was actively taking the other side of positions of FXCM client trades.
This set of circumstances is made even more unpalatable by the condition that it follows moves by the Financial Conduct Authority (FCA) in the UK which list proposals to change the way that OTC derivatives are provided to retail customers, in particular CFDs which are core business activities for many firms which are now busily engaged with the regulatory authority in dialog that aims to reach a positive outcome all round.
The pointers are that the exchange listed derivatives sector is firmly ensconced in the driver’s seat, lobbying the regulators in an attempt to win back the retail business that has made OTC firms so popular and successful and turned them into giants in their own right over the past two decades.
With FXCM’s enormous blot on the copybook of the retail sector, it is clear that the exchange sector has even more reason to attempt lobbying.
For this reason, ingenious measures by leaders of this sophisticated and ever evolving business are now beginning to develop multi-product services that provide a combination of OTC and exchange listed derivatives via one single platform to retail customers.
One such example is Australia’s Direct FX, which has majored on the integrations between venues and retail platforms since its connectivity to CME Group’s executing venue via MetaTrader 4 which was conducted as part of the firm’s strategic partnership with CQG.
Recently, in a meeting in Shanghai, FinanceFeeds spoke to Business Development Director Tim Brankin on this subject in detail, and today this has developed further, as PFSOFT’s ProTrader Multi Connect (PTMC) platform has been integrated into Direct FX’s diverse armory of on and off exchange products.
FinanceFeeds spoke today to Tim Gilroy, Head of Platform Services at Direct FX in order to look at the intrinsic detail of the integration.
Multi product trading is becoming a huge focus of retail traders these days. By integrating the ProTrader Multi Connect system into OTC and exchange traded system you are positioning retail clients with easy access to venues. Is this something that will be expanded on further?
DirectFX is always looking for ways to separate ourselves from the rest of the pack, and having multiple venues and trading platforms has been a major focus of this effort.
We feel that if a trader has access to US Equities, Futures and FX all on one platform, he or she will start to understand these markets better and trade them more effectively. We want to encourage our customers to diversify their portfolios and reach out to these other venues as part of an overall trading and investing strategy.
Our management team has a diverse background in Futures and Equities working for companies such as TD Ameritrade and eTrade where the focus has always been on delivering a wide range of markets to the self-directed investor via cutting edge technology.
We feel like we are in the early stages of granting this type of access to traders around the globe who may only be familiar and have experience trading OTC FX. Offering the PTMC platform is a sign of this commitment. PTMC is the most advanced multi-asset platform on the market used by institutions and professional traders.
We are very exciting to introduce this cutting-edge technology to our clients to access not only OTC FX but listed products on the largest Futures and Equities exchanges in the world.
With regard to the integration of ProTrader to CME via the DirectFX integration with CQG, how does the institutional derivatives sector value this as a means of Chicago showing further interest in retail traders?
DirectFX feels that giving traders access is key to getting them educated on markets they may not know about, or how to trade these markets. Having multi-asset platforms is the best way in doing this. We are in discussions with the CME and other educators to provide the training necessary to not only understand these types of markets but also how to effectively trade and invest in the products offered on these exchanges.
Investing in the OTX FX markets is much different than buying listed shares on the NYSE like IBM or Alibaba.
The same goes when speaking about buying the WTI Crude Oil or Gold on the listed Futures’ exchanges in the US. That said, the fundamentals and objectives are the same – buy low, sell high while managing risk along the way. Working with the CME and other educators will enable us to give our clients the best chance for success.
Does Direct FX consider that a lobbying movement by exchanges and listed derivatives venue proponents is attempting to revamp all OTC business onto exchange, as we have seen with various acquisitions such as Deutsche Boerse / 360T and ICE’s interest in FastMatch in 2015, and if so, is DirectFX positioned to mitigate this by participating in exchange traded retail derivatives via PFSOFT retail platform?
Given the recent developments with FXCM, the migration of OTC FX to an exchange looks to be more possible than ever before. DirectFX is well connected to many key individuals in the US trading industry and is well positioned to pivot and benefit from such a development if that should occur.
DirectFX traces its roots back to 2006 when we were a member of the NFA and regulated by the CFTC as an FCM and FDM. We would welcome the opportunity to once again become an NFA member if the rules were changed to only offer FX trading in the US on a listed derivatives venue.
Companies such as NADEX and Cantor Exchange have proven this model can work quite well for binary options so why not FX. DirectFX has the ability to connect to any participating exchange via our API connection with CQG. CQG is a global leader in exchange connections and order routing, and DirectFX would be able to connect to an OTC exchange if needed. PTMC is simply a platform, and would be connected automatically to any venue we connect with via CQG.
What type of clients will prefer the ProTrader Multi Connect platform to other off the shelf products such as MetaTrader 5 which is also now angling itself toward retail clients using exchanges with its integrations at DGCX in Dubai?
Given the functionality and features available via ProTrader Multi Connect, the type of client that will prefer PTMC will be the more sophisticated trader who demands customization and efficiency related to platform layout, chart studies and trade execution/routing.
That said, PTMC is a very intuitive platform that we feel can be used by the retail trader looking for a more flexible platform with the ability to trade from the chart, DOM or hot key functionality.
PTMC ALGO also offers traders the ability to create custom indicators and develop automated trading strategies using C#. We will work with PFSOFT to educate and train our clients on the advanced features and functionality of the platform and how to incorporate into their trading style.
We feel that MT5 will develop it’s own cult following similar to the ubiquitous MT4 platform especially once MetaQuotes decides to sunset the former system.
The look, feel and general layout is almost undiscernible at first glance however we feel that integrating MT4 scripts, indicators and EAs would speed up the adoption process and solidify MT5 as the platform of choice for the vast majority of OTC FX firms around the world. Therefore, we decided to purchase MT5 at the end of 2016 and plan on rolling out the platform to our clients in the near future.
At the end of the day, DirectFX clients have access to the most advanced trading technology and infrastructure in the industry due to our partnership with CQG, MetaQuotes, oneZero and now PFSOFT with the introduction of the PTMC platform. DirectFX has always been known for offering top tier liquidity in the OTC FX market for more than 10 years and we are excited to offer our clients a true multi-asset experience to further advance their trading skills and knowledge on a global scale.