This article was written by Jeff Wilkins, Managing Director of ThinkLiquidity.
Brokers face many kinds of risks. Market risk, operational risk, concentration risk, regulatory risk and credit risk are all factors in the day to day operations of a brokerage firm.
While all these risks need to be considered, many brokers are still behind the times when addressing technological risks. It seems that every week there is some form of a hack or attack on the FX industry and MT4 brokers are an easy target.
It is alarming how vulnerable most MT4 brokers are to attack. Add to this the increasing data security standards imposed by regulators and many brokers find themselves trying cover too many bases at the same time.
Brokers need to address these risks immediately. Below are the key areas on which to focus:
Network Security and Reliability
It is becoming increasingly important to defend your websites and web applications from attacks. DDoS (Distributed Denial of Service) attacks are up 125% over last year.
Not only are they more frequent, they are becoming more sophisticated and lasting longer. These attacks can be devastating to a brokerage, leaving it unavailable to provide services for hours or even days. Improperly configuring DDoS mitigation can result in data loss, with the potential to never recover from the damage.
Many brokerages try to save money on network reliability to reduce the upfront costs, thereby introducing single points of failure. The best defense against DDoS is to proactively monitor and analyze incoming data so that false requests can be rerouted. Combine a strong defense with a strong network and your brokerage will have the best chance of thwarting these attacks.
Once you are done reading this, please email your Hosting
Hosting
Hosting refers to the location of a broker’s technology stack. This is one of the most crucial elements of a brokerage that helps prevent the company from losing money due to being unable to mitigate latency risks.Brokers or exchanges are traditionally very vulnerable to latency arbitrage due to the speed with which financial markets move. The traditional datacenter locations for forex brokers are all centered at Equinix facilities around the globe. What Are the World’s Foremost Data Centers?Since most forex infrastructure is located at a couple of locations globally, it is wise for the broker to co-locate its infrastructure. The industry’s hotspots are London’s LD4 and LD5, New York NY4 and NY5, Tokyo’s TY3 and Hong Kong’s HK1.Hosting services can be handled internally directly with the datacenter or by using one of the available hosting solutions providers servicing the industry. The world’s most advanced data centers offer specialized products that support evolving equipment standards and technology requirements. This is essential for brokers or exchanges, many of which require a blend of physical security and power usage with turnkey relocation services and support globally.In addition to overall speed, such connections are also very helpful in minimizing security threats. Many companies even outside the finance industry prefer to rely on these types of advances hosting services.The advent of cloud hosting has also led to efficiency improvements, especially for execution and operations. This technology also gives banks a greater opportunity to drive out complexity. Hosting through the cloud also helps develop and launch new and bundled products and services, either on a stand-alone basis or in partnership.
Hosting refers to the location of a broker’s technology stack. This is one of the most crucial elements of a brokerage that helps prevent the company from losing money due to being unable to mitigate latency risks.Brokers or exchanges are traditionally very vulnerable to latency arbitrage due to the speed with which financial markets move. The traditional datacenter locations for forex brokers are all centered at Equinix facilities around the globe. What Are the World’s Foremost Data Centers?Since most forex infrastructure is located at a couple of locations globally, it is wise for the broker to co-locate its infrastructure. The industry’s hotspots are London’s LD4 and LD5, New York NY4 and NY5, Tokyo’s TY3 and Hong Kong’s HK1.Hosting services can be handled internally directly with the datacenter or by using one of the available hosting solutions providers servicing the industry. The world’s most advanced data centers offer specialized products that support evolving equipment standards and technology requirements. This is essential for brokers or exchanges, many of which require a blend of physical security and power usage with turnkey relocation services and support globally.In addition to overall speed, such connections are also very helpful in minimizing security threats. Many companies even outside the finance industry prefer to rely on these types of advances hosting services.The advent of cloud hosting has also led to efficiency improvements, especially for execution and operations. This technology also gives banks a greater opportunity to drive out complexity. Hosting through the cloud also helps develop and launch new and bundled products and services, either on a stand-alone basis or in partnership.
Read this Term provider and ask “What DDoS protection exists in the network where my servers are hosted?”
Hosting Provider Customer Service and Technical Support
We all know that the FX brokerage industry runs around the clock, around the world. You need a hosting provider that understands our industry’s requirements.
Slow customer response, downtime and other issues can affect reputations and bottom lines. Brokers need hosting providers who are highly responsive to market conditions and changing business needs. A responsive provider should address a broker’s needs quickly while handling any technical issues a broker may encounter.
Backups and Disaster Recovery
Disaster recovery and business continuity plans are a critical part of proper Risk Management
Risk Management
One of the most common terms utilized by brokers, risk management refers to the practice of identifying potential risks in advance. Most commonly, this also involves the analysis of risk and the undertaking of precautionary steps to both mitigate and prevent for such risk.Such efforts are essential for brokers and venues in the finance industry, given the potential for fallout in the face of unforeseen events or crises. Given a more tightly regulated environment across nearly every asset class, most brokers employ a risk management department tasked with analyzing the data and flow of the broker to mitigate the firm’s exposure to financial markets moves. Why Risk Management is a Fixture Among BrokersTraditionally the company is employing a risk management team that is monitoring the exposure of the brokerage and the performance of select clients which it deems risky for the business. Common financial risks also come in the form of high inflation, volatility across capital markets, recession, bankruptcy, and others.As a countermeasure to these issues, brokers have looked to minimize and control the exposure of investment to such risks.In the modern hybrid mode of operation, brokers are sending out the flows from the most profitable clients to liquidity providers and internalize the flows from customers.This is deemed less risky and are likely to incur losses on their positions.This in turn allowing the broker to increase its revenue capture. Several software solutions exist to assist brokers to manage risk more efficiently and as of 2018, most connectivity/bridge providers are integrating a risk-management module into their offerings. This aspect of running a brokerage is also one of the most crucial ones when it comes to employing the right kind of talent.
One of the most common terms utilized by brokers, risk management refers to the practice of identifying potential risks in advance. Most commonly, this also involves the analysis of risk and the undertaking of precautionary steps to both mitigate and prevent for such risk.Such efforts are essential for brokers and venues in the finance industry, given the potential for fallout in the face of unforeseen events or crises. Given a more tightly regulated environment across nearly every asset class, most brokers employ a risk management department tasked with analyzing the data and flow of the broker to mitigate the firm’s exposure to financial markets moves. Why Risk Management is a Fixture Among BrokersTraditionally the company is employing a risk management team that is monitoring the exposure of the brokerage and the performance of select clients which it deems risky for the business. Common financial risks also come in the form of high inflation, volatility across capital markets, recession, bankruptcy, and others.As a countermeasure to these issues, brokers have looked to minimize and control the exposure of investment to such risks.In the modern hybrid mode of operation, brokers are sending out the flows from the most profitable clients to liquidity providers and internalize the flows from customers.This is deemed less risky and are likely to incur losses on their positions.This in turn allowing the broker to increase its revenue capture. Several software solutions exist to assist brokers to manage risk more efficiently and as of 2018, most connectivity/bridge providers are integrating a risk-management module into their offerings. This aspect of running a brokerage is also one of the most crucial ones when it comes to employing the right kind of talent.
Read this Term. For a brokerage that relies almost exclusively on electronic trading, the ability to replicate IT infrastructure and data is essential.
Most brokerages do not invest in proper disaster recovery services due to the overheads and lack of an immediate payoff. While incurring this expense can seem tough to justify, running an entire business with a single point of failure can be devastating if something goes wrong.
No one likes paying for auto insurance, but driving without it is foolhardy. Treat disaster recovery like you treat insurance.
Security and Compliance
Do you meet critical security and compliance requirements? Security isn't just smart, it’s often the law.
The FCA recently issued new guidance for firms looking to outsource IT Security services. Last year ASIC published a report highlighting the importance of cyber resilience and how cyber risks should be addressed for businesses under ASIC jurisdiction.
If a hosting provider cannot protect a broker’s data, even if there has been no breach, a broker may still be in hot water with regulators or auditors. Brokers need to put security at the top of the list when considering a hosting provider.
Network infrastructure is the backbone of a brokerage. Everybody is fighting to grow volume, increase market share and retain clients. All of this work can be for nothing if the backbone of the business is not strong. Take time out of your day to properly review the above areas of your business.
This article was written by Jeff Wilkins, Managing Director of ThinkLiquidity.
Brokers face many kinds of risks. Market risk, operational risk, concentration risk, regulatory risk and credit risk are all factors in the day to day operations of a brokerage firm.
While all these risks need to be considered, many brokers are still behind the times when addressing technological risks. It seems that every week there is some form of a hack or attack on the FX industry and MT4 brokers are an easy target.
It is alarming how vulnerable most MT4 brokers are to attack. Add to this the increasing data security standards imposed by regulators and many brokers find themselves trying cover too many bases at the same time.
Brokers need to address these risks immediately. Below are the key areas on which to focus:
Network Security and Reliability
It is becoming increasingly important to defend your websites and web applications from attacks. DDoS (Distributed Denial of Service) attacks are up 125% over last year.
Not only are they more frequent, they are becoming more sophisticated and lasting longer. These attacks can be devastating to a brokerage, leaving it unavailable to provide services for hours or even days. Improperly configuring DDoS mitigation can result in data loss, with the potential to never recover from the damage.
Many brokerages try to save money on network reliability to reduce the upfront costs, thereby introducing single points of failure. The best defense against DDoS is to proactively monitor and analyze incoming data so that false requests can be rerouted. Combine a strong defense with a strong network and your brokerage will have the best chance of thwarting these attacks.
Once you are done reading this, please email your Hosting
Hosting
Hosting refers to the location of a broker’s technology stack. This is one of the most crucial elements of a brokerage that helps prevent the company from losing money due to being unable to mitigate latency risks.Brokers or exchanges are traditionally very vulnerable to latency arbitrage due to the speed with which financial markets move. The traditional datacenter locations for forex brokers are all centered at Equinix facilities around the globe. What Are the World’s Foremost Data Centers?Since most forex infrastructure is located at a couple of locations globally, it is wise for the broker to co-locate its infrastructure. The industry’s hotspots are London’s LD4 and LD5, New York NY4 and NY5, Tokyo’s TY3 and Hong Kong’s HK1.Hosting services can be handled internally directly with the datacenter or by using one of the available hosting solutions providers servicing the industry. The world’s most advanced data centers offer specialized products that support evolving equipment standards and technology requirements. This is essential for brokers or exchanges, many of which require a blend of physical security and power usage with turnkey relocation services and support globally.In addition to overall speed, such connections are also very helpful in minimizing security threats. Many companies even outside the finance industry prefer to rely on these types of advances hosting services.The advent of cloud hosting has also led to efficiency improvements, especially for execution and operations. This technology also gives banks a greater opportunity to drive out complexity. Hosting through the cloud also helps develop and launch new and bundled products and services, either on a stand-alone basis or in partnership.
Hosting refers to the location of a broker’s technology stack. This is one of the most crucial elements of a brokerage that helps prevent the company from losing money due to being unable to mitigate latency risks.Brokers or exchanges are traditionally very vulnerable to latency arbitrage due to the speed with which financial markets move. The traditional datacenter locations for forex brokers are all centered at Equinix facilities around the globe. What Are the World’s Foremost Data Centers?Since most forex infrastructure is located at a couple of locations globally, it is wise for the broker to co-locate its infrastructure. The industry’s hotspots are London’s LD4 and LD5, New York NY4 and NY5, Tokyo’s TY3 and Hong Kong’s HK1.Hosting services can be handled internally directly with the datacenter or by using one of the available hosting solutions providers servicing the industry. The world’s most advanced data centers offer specialized products that support evolving equipment standards and technology requirements. This is essential for brokers or exchanges, many of which require a blend of physical security and power usage with turnkey relocation services and support globally.In addition to overall speed, such connections are also very helpful in minimizing security threats. Many companies even outside the finance industry prefer to rely on these types of advances hosting services.The advent of cloud hosting has also led to efficiency improvements, especially for execution and operations. This technology also gives banks a greater opportunity to drive out complexity. Hosting through the cloud also helps develop and launch new and bundled products and services, either on a stand-alone basis or in partnership.
Read this Term provider and ask “What DDoS protection exists in the network where my servers are hosted?”
Hosting Provider Customer Service and Technical Support
We all know that the FX brokerage industry runs around the clock, around the world. You need a hosting provider that understands our industry’s requirements.
Slow customer response, downtime and other issues can affect reputations and bottom lines. Brokers need hosting providers who are highly responsive to market conditions and changing business needs. A responsive provider should address a broker’s needs quickly while handling any technical issues a broker may encounter.
Backups and Disaster Recovery
Disaster recovery and business continuity plans are a critical part of proper Risk Management
Risk Management
One of the most common terms utilized by brokers, risk management refers to the practice of identifying potential risks in advance. Most commonly, this also involves the analysis of risk and the undertaking of precautionary steps to both mitigate and prevent for such risk.Such efforts are essential for brokers and venues in the finance industry, given the potential for fallout in the face of unforeseen events or crises. Given a more tightly regulated environment across nearly every asset class, most brokers employ a risk management department tasked with analyzing the data and flow of the broker to mitigate the firm’s exposure to financial markets moves. Why Risk Management is a Fixture Among BrokersTraditionally the company is employing a risk management team that is monitoring the exposure of the brokerage and the performance of select clients which it deems risky for the business. Common financial risks also come in the form of high inflation, volatility across capital markets, recession, bankruptcy, and others.As a countermeasure to these issues, brokers have looked to minimize and control the exposure of investment to such risks.In the modern hybrid mode of operation, brokers are sending out the flows from the most profitable clients to liquidity providers and internalize the flows from customers.This is deemed less risky and are likely to incur losses on their positions.This in turn allowing the broker to increase its revenue capture. Several software solutions exist to assist brokers to manage risk more efficiently and as of 2018, most connectivity/bridge providers are integrating a risk-management module into their offerings. This aspect of running a brokerage is also one of the most crucial ones when it comes to employing the right kind of talent.
One of the most common terms utilized by brokers, risk management refers to the practice of identifying potential risks in advance. Most commonly, this also involves the analysis of risk and the undertaking of precautionary steps to both mitigate and prevent for such risk.Such efforts are essential for brokers and venues in the finance industry, given the potential for fallout in the face of unforeseen events or crises. Given a more tightly regulated environment across nearly every asset class, most brokers employ a risk management department tasked with analyzing the data and flow of the broker to mitigate the firm’s exposure to financial markets moves. Why Risk Management is a Fixture Among BrokersTraditionally the company is employing a risk management team that is monitoring the exposure of the brokerage and the performance of select clients which it deems risky for the business. Common financial risks also come in the form of high inflation, volatility across capital markets, recession, bankruptcy, and others.As a countermeasure to these issues, brokers have looked to minimize and control the exposure of investment to such risks.In the modern hybrid mode of operation, brokers are sending out the flows from the most profitable clients to liquidity providers and internalize the flows from customers.This is deemed less risky and are likely to incur losses on their positions.This in turn allowing the broker to increase its revenue capture. Several software solutions exist to assist brokers to manage risk more efficiently and as of 2018, most connectivity/bridge providers are integrating a risk-management module into their offerings. This aspect of running a brokerage is also one of the most crucial ones when it comes to employing the right kind of talent.
Read this Term. For a brokerage that relies almost exclusively on electronic trading, the ability to replicate IT infrastructure and data is essential.
Most brokerages do not invest in proper disaster recovery services due to the overheads and lack of an immediate payoff. While incurring this expense can seem tough to justify, running an entire business with a single point of failure can be devastating if something goes wrong.
No one likes paying for auto insurance, but driving without it is foolhardy. Treat disaster recovery like you treat insurance.
Security and Compliance
Do you meet critical security and compliance requirements? Security isn't just smart, it’s often the law.
The FCA recently issued new guidance for firms looking to outsource IT Security services. Last year ASIC published a report highlighting the importance of cyber resilience and how cyber risks should be addressed for businesses under ASIC jurisdiction.
If a hosting provider cannot protect a broker’s data, even if there has been no breach, a broker may still be in hot water with regulators or auditors. Brokers need to put security at the top of the list when considering a hosting provider.
Network infrastructure is the backbone of a brokerage. Everybody is fighting to grow volume, increase market share and retain clients. All of this work can be for nothing if the backbone of the business is not strong. Take time out of your day to properly review the above areas of your business.
