Revolution in trading: How third-party APIs are redefining the brokerage industry

The ability to connect to various external solutions enables brokerages to enhance their platforms, engage more traders, and increase client retention, whilst perhaps most importantly, ensuring the tailoring of services which foster differentiation of product ranges.

Gone are the days when new brokerages could solely rely on complete, out-of-the-box solutions to kick-start their operations. The landscape has evolved dramatically over the past two decades, with many early entrants either fading into obscurity or transforming into well-known industry players.

Initially, these solutions allowed new brokerages to focus on core areas like marketing, sales, and customer service without significant investment in IT infrastructure or back-office operations. However, as the industry matured, the limitations of these ‘broker-in-a-box’ solutions became apparent, particularly in their lack of flexibility and adaptability to the dynamic needs of sophisticated clients.

The strategic importance of APIs in modern brokerages

Today, the brokerage industry demands a more nuanced approach, where agility and customizability are paramount. This is where third-party APIs play a crucial role. Previously, APIs were primarily seen as tools for connecting trading platforms to liquidity providers or for integrating brokerages with comprehensive trading solutions.

However, their scope has significantly broadened. Integrating frontend tools from third-party companies via APIs is now essential to provide an optimal trading experience tailored to the discerning modern trader.

A crucial aspect of this evolution is the ability to create an open and adaptive infrastructure. Traditional off-the-shelf solutions often lack the flexibility required to meet the growing demands of the market and reconcile with the need for innovative and user-friendly experiences.

An open architecture facilitated by APIs creates a clear demarcation between the core infrastructure and the user experience. This not only ensures scalability and adaptability but also enables the seamless integration of innovative tools within existing trading environments.

Insights from industry leaders

Andrew Lane, CEO of Acuity Trading, who brings a unique perspective on the role of APIs in the brokerage industry given Acuity’s specialization in news analytics and financial market visualization services for retail organizations, emphasized the transformative power of APIs. “At Acuity, we provide Brokers with data feeds via API, which gives the broker the ultimate freedom to design and build their own products with our data. This often comes coupled with consultation from Acuity in terms of UX and UI, as often brokers have great ideas, but still need help in getting the most out of our data. No broker is the same and their needs are different. The API is just part of that flexibility spectrum, from offering widgets that can be edited to bespoke builds to data feeds via an API. APIs are also very empowering for people who like to build new ideas from building blocks, and when you meet these people, idea generators, it also spurs me on to creating new ideas for Acuity.”

Roman Nalivayko, CEO of TraderEvolution Global explained “One example of an efficient way for a brokerage to differentiate from competitors could be to integrate an in-house developed front end to the TraderEvolution multi-asset platform. A number of brokerage companies have developed their own web-based trading platforms, and their own mobile applications, which have stood these firms in a position whereby their product is recognizable as being the identity of that particular company”.

Mr Nalivayko further explained “Should a broker wish to integrate their own in-house developed front end to the TraderEvolution multi-asset platform, we are able to provide a specifically designed dedicated API for this particular purpose. This allows brokerages with their own in-house developed front end interfaces to be able to use the TraderEvolution platform as their multi-asset trading infrastructure.”

“Among our existing clients, there are some financial institutions which have built their own front end trading platforms and use the TraderEvolution back end system. In this case, the in-house developed front end platform offered by that particular brokerage or financial institution would be able to display a full set of asset classes on their in-house front end which the TraderEvolution back end provides, whilst giving the ability to be totally in control of liquidity partnerships, operational items such as risk management and client record maintenance, user groups, via the back end but retaining your own brand identity via the in-house front end” concluded Mr Nalivayko.

Aeby Samuel, CEO and Founder of FYNXT, offered insights into the significance of APIs from the vantage point of a company that offers a leading low-code and modular Forex Customer Relationship Management (CRM) platform for multi-asset brokers and financial institutions. Samuel describes APIs as the “currency of connectivity” in the financial world, essential for shaping the future of brokerages. “As we embrace this era of data-driven decision-making, APIs are the linchpin that empowers us to turn information into actionable insights, driving value for both clients and businesses. At FYNXT, we understand that an API-first architecture is paramount. We provide a seamless means for brokers to enhance their existing ecosystem with our Open APIs, fostering a future where data transforms into opportunity, empowering both our clients and the industry.”

APIs: Indispensable tools in the brokerage industry

The economic implications of integrating third-party APIs are profound. Marketing departments in retail brokerages, grappling with high client acquisition costs and increasing restrictions on advertising, can find solace in APIs. For instance, integrating popular trading tools like TradingView charts directly into the brokerage platform can attract and retain clients who are already familiar with these tools, significantly reducing acquisition costs and enhancing client lifetime value.

Furthermore, in an era increasingly dominated by data-driven decision-making, APIs serve as a crucial bridge, transforming vast amounts of data into actionable insights. This not only drives value for clients but also provides brokerages with a competitive edge, allowing them to stay ahead in a crowded market.

Third-party APIs have emerged as indispensable tools in the brokerage industry, offering a blend of flexibility, customization, and cost-effectiveness. They not only facilitate the creation of bespoke, client-focused solutions but also ensure that brokerages remain agile and responsive to the ever-changing market dynamics. As the industry continues to evolve, the strategic implementation of APIs will undoubtedly be a defining factor in the success and sustainability of brokerage businesses.