Last month, I wrote a lengthy piece describing why I think most brokers are unlikely to adopt equities trading in the near future.
Higher data costs, technological problems and much smaller room for profit, I argued, all mean most brokers won’t bother trying to become the next Robinhood.
But not everyone agreed with me.
And being the fair-minded group of hacks that we are here at Finance Magnates, we decided to hear what one of these people had to say.
“Today’s market is evolving to the point where everyone expects their technology to offer the ease of use of an iPhone – with access to multiple apps and functionality in one place,” said Andrew Ralich, the CEO and co-founder of liquidity management firm oneZero.
“Brokerage customers are no different – they will look to accomplish their investment and trading goals through a single solution. If they can’t get everything they want through your institution, they may look for another provider who can meet their needs more easily.”
Of course, Ralich has reason to believe in equities trading for brokers – his company can provide access to the service.
oneZero’s EcoSystem, a liquidity distribution network, now has more than 200 makers and takers on its books. Brokers using the platform can access anything from futures and commodities to currencies and equities.
Multi-Asset offering will be ‘table stakes’ for brokers
oneZero wouldn’t be providing access to those asset classes unless the company’s executives believed they could provide added value to clients.
And, according to Ralich, equities trading is likely to become the norm for retail brokers in the near future.
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“With traders become more sophisticated, it will increasingly become ‘table stakes’ to offer multiple asset classes so they can manage their portfolios and trading strategies,” said the oneZero CEO. “Even if users are not planning to trade in a specific asset class, they will be considering access to it as part of their assessment.
“The best way for brokers to meet this demand is to offer a holistic solution that handles a variety of financial instruments. Tier 1 retail brokers have been providing this access for some time, and have won business and market share as a result.”
Better technology, easier access
One of the key problems that brokers face when attempting to adopt equities trading is finding the requisite technology.
Most retail brokers continue to use MetaTrader 4 and, to a lesser degree, MetaTrader 5.
It is possible to trade equities with those platforms, but it’s not ideal. Put simply, they were not designed to provide direct access to the stock markets.
That being said, Ralich told Finance Magnates that improvements in third-party trading technology mean firms can now much more easily provide access to equities and other asset classes.
“It’s true that most of today’s retail brokers initially set up their businesses before off-the-shelf technology was sophisticated enough to handle true multi-asset execution,” said Ralich.
“But with advancements like direct market access to exchanges and evolving agency models, modern platforms are capable of providing the same level of multi-asset flexibility that Tier 1 brokers have spent years refining.
“Brokers that use an advanced trading platform and partner with a back-end technology provider can, in today’s market, offer their clients an enterprise-grade multi-asset trading experience without developing proprietary software.”
Well, there you have it, folks.
If you read my prior piece and were feeling all doom and gloom about adding stock trading to your platform, don’t feel too bad – oneZero is on hand to help.