Aggregation and using Multi-dealer platforms are very popular among All Institutional FX Participants. Usually these are well capitalized Hedge Funds, Money Managers, Retail Brokers, HFT proprietary trading firms. Institutional players execute substantial volumes (few hundred millions to few billions on daily/monthly basis). This allows these firms to either decide to build their own aggregator, and justify paying high salaries to their own talented IT/Development engineers, or to outsource such tasks and deploy an available aggregation & connectivity system, developed from specialized technology providers. Operating such platforms usually costs several thousands of dollars ever month and ongoing running costs.
Since Institutional players also process large trading volumes, they can also afford to have and maintain several direct relationships with multiple direct LPs (Liquidity Providers): banks, non-banks, aggregated liquidity pools from POPs (Prime of Primes), ECNs. Institutional participants have the comfort to invest for several months to an year, in building their own aggregated liquidity pool that best suited for their trading strategies, and processed flow. These firms in the end manage to achieve constant spreads between 0.1-0.2 (EURUSD, USDJPY), 8-10 cents on XAUUSD.
If we take a look at the Retail Trading space, unfortunately they have always been left to only have the possibility to deal and face their single chosen Retail Broker(s). Retail Traders don’t have the capital to open accounts with several PoPs in excess of $100-250K, not to mention tier-1 PB, who would demand $20-50 mil. Traders always depend on what their Retail Brokers can offer in terms of a Single-Dealer trading platforms, the quality of execution they provide, their spreads & trading terms. The actual process of choosing the right Broker often happens after several mistakes are done, Traders share own experience in public and trading communities, check various Brokers comparison websites. Traders are also constantly targeted by the Brokers sales teams, network of IBs and affiliates, and their creative marketing teams like offering bonus programs, improved trading conditions if switch form current Broker, cash-back rebates etc).
Nowadays choosing the right Broker(s) among more than 1000+, who all offer trading of the same products (FX and CFDs) and often via the same platforms (MT4 as an example), is not an easy task and decision on its own. Often, after spending weeks in research, Traders are unpleasantly surprised from their Brokers, when they face their quality of execution, spreads, slippage, execution speed etc. unfortunately these details often are hidden and often do not match what has been promised, advertised or expected.
Disrupting the status quote and studying the discrepancies that exist today between Institutional and Retail FX, or team our team has created FXBBO platform.
We are trying to close the gap and enable individual Retail Traders to gain independence from a single Broker relationship, to achieve similar level of interbank narrow spreads, filter out non-performing Brokers and only use the quality ones. Retail Traders can now create and trade on their own Best BID/OFFER liquidity pool, with a fraction of the cost, and easily connect to multiple brokers via the widely used MT4 platform (to start with)…