"Small but complete". Any industry has a relatively complete industrial chain, and the retail foreign exchange industry is no exception. From a macro perspective, the retail foreign exchange industry chain can be roughly divided into upstream, midstream and downstream industries, and each industry is interlinked and indispensable.
Next, let's briefly explain the upstream industry chain of the retail foreign exchange industry.
No.1
Construction of the trading platform
This is the most basic and the most forward link. Platform construction can be divided into two types, one is specialized in platform construction, equivalent to a professional consultant and solution company, one-stop to help you solve problems, is what we usually call platform technology builders, they can Help you go from nothing to everything. They build platforms for customers to get paid and are responsible to customers. Another possibility is the white label business of traditional brokers, which can be regarded as a kind of construction, but it is definitely not a construction and solution company.
No.2
liquidity provider
If an order is not consumed on the way, then this trading model is a market maker model. It is unrealistic for most traders to connect with the liquidity of big investment banks like Goldman Sachs and Morgan Stanley, because These traders do not have corresponding (sufficient) qualifications and margins.
Then, at this time, it is necessary to receive quotations from some large prime brokers or LPs that integrate liquidity quotations. In a broad sense, everyone who participates in the trading process can be said to provide liquidity for the market, whether it is personal trading, high-frequency trading or market makers.
At present, in order to allow more brokers to spend less cost or lower the threshold, there are technical institutions in the market that specialize in integrating liquidity. They are so-called liquidity providers, such as Lmax, CFH, etc.
The global liquidity providers can be large traders, POP service providers, liquidity integration companies, ECNs and market maker banks.
No.3
Bridge Technology Provider
Bridging companies, the earliest is because MT4 itself is just a piece of software. As far as itself is concerned, MT4 is specially designed and developed for market makers.
If traders want to obtain multiple quotes from LP, they must develop some protocol bridging software, such as FIX-based bridging software. At this time, bridge technology providers came into being. For example, Gold-i, PrimeXM, etc., they will charge brokerage fees based on traffic.
Foreign exchange trading has strict requirements on the stability of bridging technology. This is to judge whether a bridging company is good or bad, because these can directly affect customer transactions and brokerage business.
No.4
Customer Management System
A customer management system (CRM) is an indispensable system for most companies, especially among brokers.
CRM mainly uses advanced IT tools (mainly enterprise intelligence systems) to support the three major functions of marketing (Marketing), sales (Sales) and service (Service) in the enterprise value chain, and through various customer-selectable To fully interact with customers through channels to achieve customer acquisition, satisfaction, loyalty and net worth improvement.
CRM systems can be divided into collaborative CRM systems, data analysis CRM systems, and operational CRM systems.
The foreign exchange CRM system, usually combined with the rebate system, has some functions unique to foreign exchange CRM: user management, account opening management, trading account, commission setting, deposit and withdrawal management, commission setting, rebate setting, etc.
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No.5
License agency
Applying for a license is a very important thing for traders, and it is also a very important thing for traders.
For a trader, the better the license applied for, the more advantages and confidence they have when conducting business. This is a bit like a diploma from a prestigious school. Although you don’t know how capable the graduate is at work, but from the perspective of brand effect and risk alone, there are still many graduates who graduated from a prestigious school or graduated from an ordinary school. big difference.
At the same time, on the other hand, a strict regulation will have more requirements for the compliance of traders, and at the same time, it will provide more protection for investors.
But what I want to say here is that the license is always a license, and it is not directly related to the trading environment, transaction costs, etc. of this dealer. But, generally speaking, the better the regulation, the stronger the compliance.
No.6
payment company
Payment companies, due to domestic foreign exchange controls, conduct foreign exchange margin transactions, which can be understood as overseas investment. Generally speaking, traders will choose to cooperate with domestic payment companies.
No.7
server
Servers can be mainly divided into three types: website server, transaction server and MT4 server.
The website server is not very important for traders, but the MT4 server and trading server will affect the delay of the transaction. Many companies will put the MT4 server in Hong Kong, and the trading server in NY4 New York, LD4 London, TY3 Tokyo.
NY4 New York, LD4 London, and TY3 Tokyo data centers have established direct cable and fiber optic connections with many top banks and liquidity providers. They are low-latency trading server locations and have a dedicated foreign exchange low-latency suite.
However, there are also many companies that directly place MT4 servers in NY4 New York, LD4 London, and TY3 Tokyo trading centers, so that the delay will be lower.
No.8
trading software
Any transaction must be carried out through trading software. The difference is whether you use software developed by independent software companies or software developed by powerful traders themselves. Trading software is essential for traders.
Among the trading software companies, MetaQuotes is probably the most famous, MT4 has a huge domestic market share and the advancement of MT5. Of course, many large traders will also develop some trading software themselves. From a universal point of view, MT4 and MT5 are more universal and adaptable, but for large traders, due to their customer positioning The reason may be better in terms of professionalism.
In addition, cTrader is one of the most popular trading platforms for brokers and traders besides the MT4 platform. It was launched by London-based technology provider Sportware Systems and is currently used by more brokers.
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Last updated: 09/02/2023 01:03
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