Over in my other job of writing posts for Forex Magnates, I covered the increased importance of non-forex products being offered by brokers. While forex still composed the majority of trading among retail traders, non-forex products such as CFD that track prices in stocks, commodities, and equity indexes are becoming a much more important product. As a result, in the last two months, GAIN Capital, FXCM, and Saxo Bank have each mentioned the importance of having diverse product ranges to meet the needs of shifting client interest.
While still not a household name among retail traders, bitcoin products are slowly popping up on trading screens of brokers. Being the best performing currency of 2013 has gone a long way in helping drive demand for tradable bitcoin products from traders. As a result, more and more often brokers are receiving interest from their customers for bitcoin.
Despite the client interest, integration among brokers has been slow, due to questions of feed reliability, headline risk involved with offering bitcoins, and limits of hedging. Aiming to take things into higher gear, , a new startup is launching a FREE open bitcoin feed for the MetaTrader 4 platform. For those unfamiliar with MetaTrader 4 (MT4), the platform is the most popular system being used by retail forex traders, with estimates of nearly 25% of global volumes processed on the platform. With the exception of Japan, where MT4 usage is still minimal due to a variety of reasons including the availability of reporting features to meet financial regulator requirements, as well as the lack of comprehensive Japanese language help files, MT4 is a staple offering of 90% of all retail forex brokers. As a result, small changes or additions to the platform can make a large difference in the industry.
Currently entering the market is Timur Latypoff Technology Lab (TLTL), a fintech startup that provides liquidity management and tools for brokers offering the MT4 platform. Launched by Timur Latypoff, who previously worked at Tools for Brokers, among TLTL’s first product launches is a free bitcoin feed. Explaining the rationale of a free product, Latypoff cited to DC Magnates both his large interest in bitcoins as well as the aim to get their offerings into the market quickly, as he stated “Firstly, of course, we are a newly formed company and we would love more people to know who we are and what we do. Secondly, I do personally believe that Bitcoin might actually be a significant part of our future. And I see what little steps we can take in order to make bitcoin market more civilized and widespread”
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With the feed, brokers can connect pricing into their MetaTrader 4 servers, which can be used to create CFDs of bitcoins for their customers. While end-users won’t be able to actually take possession of the digital currency, the MetaTrader 4 products provide the ability to profit on the moves of bitcoin prices.
In terms of taking the ‘open’ source code approach, Latypoff expressed that “I have been always noticing that Forex world is plagued with closed solutions that tie brokerages’ hands, exposing their businesses to unnecessary extra risk. We suggest that products that cost their money should actually be open (not only be called “open”) and subject to constant innovation. So this price feed is our first experience in offering a completely open solution to the public. We’d like to see how it goes.”
Similar to a feed launched earlier this year by Gold-i, another MT4 technology vendor, TLTL will be streaming pricing from MtGox. While prices from MtGox have become less quoted as the standard for bitcoins in recent months, Latypoff defended the use of their feed by saying that they have created products using pricing from a variety of exchanges but were launching with MtGox because it was a well-known firm, and one that brokers would recognize. According to Latypoff, after installing the price feed, brokers can configure products across any denomination, such as BTC/USD, BTC/JPY, BTC/CNY, etc.
Will the feed help get bitcoin on the screens of retail broker MetaTrader 4 platforms? Well, free is a four letter word that firms don’t complain about hearing.