The main components of a broker’s work are trading automation, liquidity management and risk management. The Liquidity Aggregation Center (Hub) is a software package that the broker can use to solve these tasks.
How to increase a broker’s profitability using an aggregator
Let’s look at two main methods:
- Through commission on turnover and markup: the broker sends clients’ trades to liquidity providers via A-book. As a rule, these are groups of experienced, stable traders with large deposits.
- The broker himself provides liquidity to clients without taking transactions to the interbank market. This profitability of this scheme depends on the risk manager, who analyzes traders’ behavior and sets up risk groups.
In both cases, the MT4 bridge plugin is used to help the broker set up groups and liquidity management. The plugin performs an automatic redirection between A/B books depending on the change in volume or market conditions (important news, change in volatility, etc.)
Software technologies (tools for brokers)
Advertising and marketing won’t help to maintain a strong position in the market if the broker does not work effectively. In addition to the speed of request processing, customers need additional services, a choice of tools and analytics.
Basic functionality
Liquidity Bridge is a plugin that can:
- Transfer quotes from liquidity providers to the client’s terminal;
- Direct the flow of orders from the terminal to the liquidity provider without a broker’s participation.
MT4 bridge risk management features:
- automatic switching between A/B books depending on market conditions;
- consolidation and distribution of volumes, setting up groups of traders.
Virtual Dealer MT4(MT5) is a client application for processing orders in B-book.
Plugin features:
- change markups for symbols;
- set up trading conditions for groups of traders depending on trading style.
Company scaling
Multi Account Manager — the broker sets up a mini hedge fund based on the Metatrader platform. Thanks to the service, the number of customers grows and the trade turnover increases.
How the plugin works:
- Investors choose a manager and place funds in his account;
- The manager conducts transactions based on the total amount of investors’ funds;
- Profits and losses are distributed among the participants based on the size of the deposit.
Flex Rebate is a multi-level plugin, with its help the broker and agents receive commissions for the transactions of agents of a lower level.
The service attracts new customers by earning as agents in the chain of traders. Bonus cashback is a plugin for launching advertising campaigns and paying cashback for customer transactions.
Broker automation
- Anti-Fake account – the program analyzes the server log and warns if several clients come from the same IP address.
- Email Notifier StopOut – Monitors StopOut and MarginCall events and sends email notifications to customers.
- Risk Profiling is a risk management plugin that analyzes open positions and classifies traders’ accounts by trading style.
Conclusion
The choice of a software supplier depends on a company’s development strategy, taking into account competitor analysis and understanding of the goals. Brainstorm to find out which hub functionality suits your needs.
Salman is a prolific environmental writer, and has authored more than 500 articles in reputed journals, magazines and websites. He is proactively engaged in creating mass awareness on renewable energy, waste management, sustainability and conservation all over the world.
Salman can be reached on salman@cleantechloops.com
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