Last week, FXCM Group announced a refresh of the company’s institutionally-focused business FXCM Pro. The firm committed to a radical reshaping of the offering, opening the doors to new products and a brand new team.

We sat down with the senior management team of FXCM Pro and elaborated on the new product and some misconceptions about prime of prime brokers today.

FM: Could you share the team behind the development and sales of the new FXCM Pro product?

FXCM Pro: Absolutely. The team is led by our Chief Commercial Officer, Siju Daniel, an FXCM veteran who has demonstrated enormous success in running our Asian operations. He is joined by Mario Sanchez who was recently promoted to Managing Director for FXCM Pro and has over 12 years of experience in the global institutional space, and Justin Boulton, with over 20 years of industry experience as the Head of FXCM Prime. In addition, we have Fady Tadrous, who is building our Arabic FXCM Pro client base, Kenneth Wong and Vladimir Livshits leading our APAC institutional desk, whilst Trent Earwaker and James Taylor are leading the institutional Europe desk.

FM: How have you reinvented FXCM Pro what’s new, what’s missing from before and why?

FXCM Pro: We took a multi-pronged approach to reinvent FXCM Pro. We looked closely at a range of different areas such as hiring the right people, enhancing our product offering and partnering with the right service providers.

One important aspect was to ensure we had the best team in place to take FXCM Pro to the next level. We’re lucky to have a group of extremely talented people in the industry working for us already, so we focused on leveraging their experience to focus on the department. We’re pleased with the team we built and promoted various tenured FXCM employees to focus on specific areas of the institutional business. This has allowed FXCM Pro to continue to focus its efforts on what’s most important - our clients.

In addition, we took the opportunity to significantly re-structure the department, making it leaner and more efficient. Gone are the days where valuable feedback is funneled through tiered groups of management, but rather, our executive team plays a crucial role in the day-to-day management. This is already proving to be a much more transparent, and results-orientated approach.

From a product offering standpoint, we focused on enhancing our existing offering, by seeking quality client feedback, and in turn committing to the necessary steps to deliver solutions. As a result, we now have a stronger service, particularly for CFDs, and welcome algorithmic flow on CFDs without restrictions. This means that if a broker wants a  Liquidity   Liquidity The term liquidity refers to the process, speed, and ease of which a given asset or security can be converted into cash. Notably, liquidity surmises a retention in market price, with the most liquid assets representing cash. The most liquid asset of all is cash itself. ·      In economics, liquidity is defined by how efficiently and quickly an asset can be converted into usable cash without materially affecting its market price. ·      Nothing is more liquid than cash, while other assets represent varying degrees of liquidity. This can be differentiated as market liquidity or accounting liquidity.·      Liquidity refers to a tangible construct that can be measures. The most common ways to do so include a current ratio, quick ratio, and cash ratio. What is the Definition of Liquidity? Liquidity is a common definition used in investing, banking, or the financial services space. Its primary function is to ascertain how quickly a given asset can be bought, sold, or exchanged without a disparity in market price.  Which of the following assets is the most liquid? By definition, in terms of liquidity, cash is unequivocally seen as the most liquid asset in an economic sense. This is due to its widespread acceptance and ease of conversion into other assets, forms of cash, or currencies, etc. All other liquid assets must be able to be quickly and efficiently converted into cash, i.e., financial liquidity. This includes such things as stocks, commodities, or virtually any other construct that has an associated value. By extension, illiquid or non-liquid assets are not able to be quickly converted into cash. These assets, also known as tangible assets, can include such things as rare art or collectables, real estate, etc. Liquidity Spectrum Liquid assets can be defined primarily as either cash on hand or simply an asset that can be easily or readily converted into usable cash. It is important to note that cash is not uniformly liquid for several reasons. The below examples encompass all types of assets and their corresponding level of liquidity. Examples of Liquid Assets or Securities A good example of this is the US dollar, which is recognized or accepted globally, and backed by the US government or Federal Reserve Bank. Other major forms of cash include Euros, or major currencies. This differs notably from the legal tender in many emerging countries or others for political or economic reasons.  Cash aside, assets such as stocks or equities, bonds and other securities, money market assets, marketable securities, US treasuries or T-notes, exchange-traded funds (ETFs), a savings account, and mutual funds serve as the most liquid assets. These are generally assumed to be quick assets. Each of these assets can be converted into cash either instantaneously, or via any brokerage platform, exchange, etc., often in as little as minutes or seconds. As such, these assets are liquid. Examples of Illiquid Assets or Securities Conversely, illiquid assets still retain importance and value, though are much more difficult to convert into cash. Common examples of this include land or real estate, intellectual property, or other forms of capital such as equipment or machinery. In the examples above, liquid assets are assumed to be convertible into cash without substantial fees or delays in time. Illiquid assets on the other hand often suffer from fees or additional conversion costs, processing times, ultimately creating a price disparity. The best example of an illiquid asset is a house. For many individuals this is the most valuable asset they will own in their entire lives. However, selling a house typically requires taxes, realtor fees, and other costs, in addition to time. Real estate or land also takes much longer to exchange into cash, relative to other assets.  Types of Liquidity Overall, liquidity is a broad term that needs to be defined by two different measures: market liquidity and accounting liquidity. Both measures deal with different constructs or entities entirely, though are useful metrics with regards to individuals or financial markets. Market Liquidity Market liquidity is a broader term that is used by a market maker to measure the ease of which assets can be bought and sold at transparent prices, namely across exchanges, stock markets, or other financial sectors. This can include among others, a real estate or property market, market for fine arts and collectable, and other goods. Market Liquidity Example As mentioned above, certain financial markets are much more liquid than others. The degree to which stocks from large companies or foreign currencies can be exchanged is much easier than finding a readily available market for antiques, collectables, or other capital, regardless of utility. Overall, a stock market, financial brokerage, or exchange is considered to have the high market liquidity. This is because the difference between both the bid and ask prices between parties is very low. The lower the spread between these two prices, the more liquid a given market is. Additionally, low liquidity refers to a higher spread between two prices. Why Liquidity Varies and What Does Liquidity Mean in Stocks? Every asset has a variable level of liquidity meaning this can change depending on what is being analyzed. One can define liquidity in stocks or stock markets in the same way as in foreign exchange markets, brokers, commodities exchanges, and crypto exchanges.  Additionally, how large the market is will also dictate liquidity. The foreign exchange market for example is currently the largest by trading volume with high liquidity due to cash flows. This is hardly surprising given that forms of cash or currencies are being exchanged. What is Liquidity in Stocks? A stock's liquidity refers to how rapidly shares of a stock can be bought or sold without largely impacting a stock price. By definition, liquidity in stocks varies for a number of reasons. Stocks with low liquidity may be difficult to sell and may cause you to take a bigger loss if you cannot sell the shares when you want to. In finance, the most liquid assets are always the most popular. By extension, if a spread between buyers and sellers increases, the market is considered to be less liquid. A good example of this is the real estate or property market. While highly valuable, there are large disparities between the purchase price and selling price of property, as well as the time associated in making these transactions, and additional fees incurred by other parties. Liquidity providers play a key role in this regard. Accounting Liquidity Unlike market liquidity, accounting liquidity measures something different entirely. Accounting liquidity is a measure by which either an individual or entity can meet their respective current financial obligations with the current liquid assets available to them. This includes paying off debts, overhead, or any other fixed costs associated with a business. Accounting liquidity is a functional comparison between one’s current liquid assets and their current liabilities. In the United States and other countries, companies and individuals have to reconcile accounting on a yearly basis. Accounting liquidity is an excellent measure that captures financial obligations due in a year. Accounting Liquidity Example Accounting liquidity itself can be differentiated by several ratios, controlling for how liquid assets are. These measures are useful tools for not just the individual or company in focus but for others that are trying to ascertain current financial health.As an example, accounting liquidity can measure any company’s current financial assets and compare them to its financial obligations. If there is a large disparity between these figures, or much more assets than obligations, a company can be considered to have a strong depth of liquidity.How to Calculate Liquidity Liquidity is of importance to investors, financial market participants, analysts, or even for an investment strategy. Calculating liquidity is a measure of firm or individual’s ability to utilize or harness current liquid assets to current cover short-term debt. This can be achieved using a total of four formulas: the current ratio, quick ratio, acid-test variation, and cash ratio. Current Ratio The current ratio is the easiest measure due to its lack of complexity. Quite simply, the current ratio measures a firm or individual’s current assets or those than can be sold within a calendar year, weighed against all current liabilities. Current Ratio = Current Assets/Current Liabilities If the current ratio’s value is greater than 1, then the entity in question can be assumed to reconcile its financial obligations using its current liquid assets. Highly liquid assets will correspond to higher numbers in this regard. Conversely, any number less than 1 indicates that current liquid assets are not enough to cover short-term obligations. Quick Ratio A quick ratio is a slightly more complex way of measuring accounting liquidity via a balance sheet. Unlike the current ratio, the quick ratio excludes current assets that are not as liquid as cash, cash equivalents, or other shorter-term investments. The quick ratio can be defined below by the following: Quick Ratio = (Cash or Cash Equivalents + Shorter-Term Investments + Accounts Receivable)/Current Liabilities Acid-Test Ratio  The acid-test ratio is a variation of the quick ratio. The acid-test ratio seeks to deduct inventory from current assets, serving as a traditionally broader measure that is more forgiving to individuals or entities. Acid-Test Ratio = (Current Assets – Inventories – Prepaid Costs)/Current Liabilities Cash Ratio Finally, the cash ratio further isolates current assets, looking to measure only liquid assets that are designated as cash or cash equivalents. In this sense, the cash ratio is the most precise of the other liquidity ratios, excluding accounts receivable, inventories, or other assets.  A more precise measure has its uses, namely regarding assessing financial strength in the face of an emergency, i.e., an unforeseen and time sensitive event. The cash ratio can help measure an entity or individual’s hypothesized solvency in the face of unexpected scenarios, events, etc. As such, the cash ratio is defined below: Cash Ratio = Cash and Cash Equivalents/Current Liabilities  The cash ratio is not simply a doomsday tool but a highly practical measure when determining market value. In the financial services space, even large companies or profitable institutions can find themselves at liquidity risk due to unexpected events beyond their control. Why is Liquidity Important and Why it Matters to You? Liquidity is very important for not just financial markets but for individuals and investors. Liquid markets benefit all market participants and make it easier to buy and sell securities, stocks, collectables, etc.  On an individual level, this is important for personal finance, as ordinary investors are able to better take advantage of trading opportunities. Additionally, high liquidity promotes financial health in companies in the same way it does for individuals. Conclusion – What Does Liquidity Mean? What is liquidity? This metric is a commonly used as a measure in the investing, banking, or financial services space. Liquidity determines how quickly a given asset can be bought, sold, or exchanged without a disparity in market price.  Which of the following assets is the most liquid? – cash, stocks, real estate. Of all assets, cash or money is the most liquid, meaning it is the easiest to utilize. All other liquid assets must be able to be quickly and efficiently converted into cash. This includes such things as stocks, commodities, or virtually any other construct that has an associated value. Conversely, illiquid or non-liquid assets are not able to be quickly converted into cash. These assets, also known as tangible assets, can include such things as rare art or collectables, real estate, etc. Frequently Asked Questions About Liquidity Is Liquidity Good or Bad? The term liquidity refers to a measure and is neither good nor bad but is instead a metric of how convertible an asset is to cash. However, high liquidity is associated with lower risk, while a liquid stock is more likely to keep its value when being traded.Is a Home a Liquid Asset? A home or properly is not considered to be a liquid asset. Selling any property can incur additional costs and take a long amount of time. Additionally, there is often a price disparity from the time of purchase, meaning a seller may not even get its original market value back at the time of the sale. Why Are Stocks Liquid? Stocks are some of the most liquid assets in financial markets because these assets can be converted to cash in a short period of time in the event of any financial emergency. Is Tesla a Liquid Stock? Tesla is a liquid stock and while hugely volatile, is an integral part of the NASDAQ and is a globally recognized company. Additionally, the company is a popular single-stock CFD offering at many brokerages, with very high volumes. Is a Pension a Liquid Asset? Certain pensions are liquid assets once you have reached a retirement age. Until you are eligible to withdraw or collect a pension, without early withdrawal penalty, it is not considered a liquid asset. The term liquidity refers to the process, speed, and ease of which a given asset or security can be converted into cash. Notably, liquidity surmises a retention in market price, with the most liquid assets representing cash. The most liquid asset of all is cash itself. ·      In economics, liquidity is defined by how efficiently and quickly an asset can be converted into usable cash without materially affecting its market price. ·      Nothing is more liquid than cash, while other assets represent varying degrees of liquidity. This can be differentiated as market liquidity or accounting liquidity.·      Liquidity refers to a tangible construct that can be measures. The most common ways to do so include a current ratio, quick ratio, and cash ratio. What is the Definition of Liquidity? Liquidity is a common definition used in investing, banking, or the financial services space. Its primary function is to ascertain how quickly a given asset can be bought, sold, or exchanged without a disparity in market price.  Which of the following assets is the most liquid? By definition, in terms of liquidity, cash is unequivocally seen as the most liquid asset in an economic sense. This is due to its widespread acceptance and ease of conversion into other assets, forms of cash, or currencies, etc. All other liquid assets must be able to be quickly and efficiently converted into cash, i.e., financial liquidity. This includes such things as stocks, commodities, or virtually any other construct that has an associated value. By extension, illiquid or non-liquid assets are not able to be quickly converted into cash. These assets, also known as tangible assets, can include such things as rare art or collectables, real estate, etc. Liquidity Spectrum Liquid assets can be defined primarily as either cash on hand or simply an asset that can be easily or readily converted into usable cash. It is important to note that cash is not uniformly liquid for several reasons. The below examples encompass all types of assets and their corresponding level of liquidity. Examples of Liquid Assets or Securities A good example of this is the US dollar, which is recognized or accepted globally, and backed by the US government or Federal Reserve Bank. Other major forms of cash include Euros, or major currencies. This differs notably from the legal tender in many emerging countries or others for political or economic reasons.  Cash aside, assets such as stocks or equities, bonds and other securities, money market assets, marketable securities, US treasuries or T-notes, exchange-traded funds (ETFs), a savings account, and mutual funds serve as the most liquid assets. These are generally assumed to be quick assets. Each of these assets can be converted into cash either instantaneously, or via any brokerage platform, exchange, etc., often in as little as minutes or seconds. As such, these assets are liquid. Examples of Illiquid Assets or Securities Conversely, illiquid assets still retain importance and value, though are much more difficult to convert into cash. Common examples of this include land or real estate, intellectual property, or other forms of capital such as equipment or machinery. In the examples above, liquid assets are assumed to be convertible into cash without substantial fees or delays in time. Illiquid assets on the other hand often suffer from fees or additional conversion costs, processing times, ultimately creating a price disparity. The best example of an illiquid asset is a house. For many individuals this is the most valuable asset they will own in their entire lives. However, selling a house typically requires taxes, realtor fees, and other costs, in addition to time. Real estate or land also takes much longer to exchange into cash, relative to other assets.  Types of Liquidity Overall, liquidity is a broad term that needs to be defined by two different measures: market liquidity and accounting liquidity. Both measures deal with different constructs or entities entirely, though are useful metrics with regards to individuals or financial markets. Market Liquidity Market liquidity is a broader term that is used by a market maker to measure the ease of which assets can be bought and sold at transparent prices, namely across exchanges, stock markets, or other financial sectors. This can include among others, a real estate or property market, market for fine arts and collectable, and other goods. Market Liquidity Example As mentioned above, certain financial markets are much more liquid than others. The degree to which stocks from large companies or foreign currencies can be exchanged is much easier than finding a readily available market for antiques, collectables, or other capital, regardless of utility. Overall, a stock market, financial brokerage, or exchange is considered to have the high market liquidity. This is because the difference between both the bid and ask prices between parties is very low. The lower the spread between these two prices, the more liquid a given market is. Additionally, low liquidity refers to a higher spread between two prices. Why Liquidity Varies and What Does Liquidity Mean in Stocks? Every asset has a variable level of liquidity meaning this can change depending on what is being analyzed. One can define liquidity in stocks or stock markets in the same way as in foreign exchange markets, brokers, commodities exchanges, and crypto exchanges.  Additionally, how large the market is will also dictate liquidity. The foreign exchange market for example is currently the largest by trading volume with high liquidity due to cash flows. This is hardly surprising given that forms of cash or currencies are being exchanged. What is Liquidity in Stocks? A stock's liquidity refers to how rapidly shares of a stock can be bought or sold without largely impacting a stock price. By definition, liquidity in stocks varies for a number of reasons. Stocks with low liquidity may be difficult to sell and may cause you to take a bigger loss if you cannot sell the shares when you want to. In finance, the most liquid assets are always the most popular. By extension, if a spread between buyers and sellers increases, the market is considered to be less liquid. A good example of this is the real estate or property market. While highly valuable, there are large disparities between the purchase price and selling price of property, as well as the time associated in making these transactions, and additional fees incurred by other parties. Liquidity providers play a key role in this regard. Accounting Liquidity Unlike market liquidity, accounting liquidity measures something different entirely. Accounting liquidity is a measure by which either an individual or entity can meet their respective current financial obligations with the current liquid assets available to them. This includes paying off debts, overhead, or any other fixed costs associated with a business. Accounting liquidity is a functional comparison between one’s current liquid assets and their current liabilities. In the United States and other countries, companies and individuals have to reconcile accounting on a yearly basis. Accounting liquidity is an excellent measure that captures financial obligations due in a year. Accounting Liquidity Example Accounting liquidity itself can be differentiated by several ratios, controlling for how liquid assets are. These measures are useful tools for not just the individual or company in focus but for others that are trying to ascertain current financial health.As an example, accounting liquidity can measure any company’s current financial assets and compare them to its financial obligations. If there is a large disparity between these figures, or much more assets than obligations, a company can be considered to have a strong depth of liquidity.How to Calculate Liquidity Liquidity is of importance to investors, financial market participants, analysts, or even for an investment strategy. Calculating liquidity is a measure of firm or individual’s ability to utilize or harness current liquid assets to current cover short-term debt. This can be achieved using a total of four formulas: the current ratio, quick ratio, acid-test variation, and cash ratio. Current Ratio The current ratio is the easiest measure due to its lack of complexity. Quite simply, the current ratio measures a firm or individual’s current assets or those than can be sold within a calendar year, weighed against all current liabilities. Current Ratio = Current Assets/Current Liabilities If the current ratio’s value is greater than 1, then the entity in question can be assumed to reconcile its financial obligations using its current liquid assets. Highly liquid assets will correspond to higher numbers in this regard. Conversely, any number less than 1 indicates that current liquid assets are not enough to cover short-term obligations. Quick Ratio A quick ratio is a slightly more complex way of measuring accounting liquidity via a balance sheet. Unlike the current ratio, the quick ratio excludes current assets that are not as liquid as cash, cash equivalents, or other shorter-term investments. The quick ratio can be defined below by the following: Quick Ratio = (Cash or Cash Equivalents + Shorter-Term Investments + Accounts Receivable)/Current Liabilities Acid-Test Ratio  The acid-test ratio is a variation of the quick ratio. The acid-test ratio seeks to deduct inventory from current assets, serving as a traditionally broader measure that is more forgiving to individuals or entities. Acid-Test Ratio = (Current Assets – Inventories – Prepaid Costs)/Current Liabilities Cash Ratio Finally, the cash ratio further isolates current assets, looking to measure only liquid assets that are designated as cash or cash equivalents. In this sense, the cash ratio is the most precise of the other liquidity ratios, excluding accounts receivable, inventories, or other assets.  A more precise measure has its uses, namely regarding assessing financial strength in the face of an emergency, i.e., an unforeseen and time sensitive event. The cash ratio can help measure an entity or individual’s hypothesized solvency in the face of unexpected scenarios, events, etc. As such, the cash ratio is defined below: Cash Ratio = Cash and Cash Equivalents/Current Liabilities  The cash ratio is not simply a doomsday tool but a highly practical measure when determining market value. In the financial services space, even large companies or profitable institutions can find themselves at liquidity risk due to unexpected events beyond their control. Why is Liquidity Important and Why it Matters to You? Liquidity is very important for not just financial markets but for individuals and investors. Liquid markets benefit all market participants and make it easier to buy and sell securities, stocks, collectables, etc.  On an individual level, this is important for personal finance, as ordinary investors are able to better take advantage of trading opportunities. Additionally, high liquidity promotes financial health in companies in the same way it does for individuals. Conclusion – What Does Liquidity Mean? What is liquidity? This metric is a commonly used as a measure in the investing, banking, or financial services space. Liquidity determines how quickly a given asset can be bought, sold, or exchanged without a disparity in market price.  Which of the following assets is the most liquid? – cash, stocks, real estate. Of all assets, cash or money is the most liquid, meaning it is the easiest to utilize. All other liquid assets must be able to be quickly and efficiently converted into cash. This includes such things as stocks, commodities, or virtually any other construct that has an associated value. Conversely, illiquid or non-liquid assets are not able to be quickly converted into cash. These assets, also known as tangible assets, can include such things as rare art or collectables, real estate, etc. Frequently Asked Questions About Liquidity Is Liquidity Good or Bad? The term liquidity refers to a measure and is neither good nor bad but is instead a metric of how convertible an asset is to cash. However, high liquidity is associated with lower risk, while a liquid stock is more likely to keep its value when being traded.Is a Home a Liquid Asset? A home or properly is not considered to be a liquid asset. Selling any property can incur additional costs and take a long amount of time. Additionally, there is often a price disparity from the time of purchase, meaning a seller may not even get its original market value back at the time of the sale. Why Are Stocks Liquid? Stocks are some of the most liquid assets in financial markets because these assets can be converted to cash in a short period of time in the event of any financial emergency. Is Tesla a Liquid Stock? Tesla is a liquid stock and while hugely volatile, is an integral part of the NASDAQ and is a globally recognized company. Additionally, the company is a popular single-stock CFD offering at many brokerages, with very high volumes. Is a Pension a Liquid Asset? Certain pensions are liquid assets once you have reached a retirement age. Until you are eligible to withdraw or collect a pension, without early withdrawal penalty, it is not considered a liquid asset. Read this Term provider that can handle that flow on FX or CFDs, FXCM Pro is by far the best option available.

It’s important to note that whilst this process was underway; we were still catering to FXCM Pros’ client base seeking execution, liquidity, and clearing solutions. We serviced a wide range of wholesale clients who continued to utilize FXCM Pro’s services. This meant we could successfully upgrade our offering in parallel to providing excellent service to our customers.

FM: Is it going to be co-branded with Leucadia like the brokerage is?

FXCM Pro: Yes. We’re really pleased to be part of the Leucadia family and believe it’s helping us to promote all areas of the business. We’ve implemented the co-branding on all FXCM’s different services since we’ve become part of the group.

The State of Prime of Prime Brokers

FM: It seems as though there are a few interpretations of what prime-of-prime means to different participants – so what is a “real” prime-of-prime?

FXCM Pro: It’s in the interests of the so-called “prime-of-primes” (POPs) to maintain the ambiguity of what exactly constitutes a prime-of-prime provider. This way, they can keep calling themselves a POP when in reality, they’re just offering liquidity and execution services and dressing it up as prime-of-prime.

A real prime-of-prime is a neutral intermediary that offers a pure clearing solution with direct market access – it does not operate a liquidity pool of its own.

The litmus test for finding a “true” POP is if you call a prime-of-prime broker and they start talking about their fill rates, spreads and latency times. A real prime-of-prime doesn’t get involved in those discussions, all they do is give clients direct market access to a number of ECNs.

FXCM is one of the few POPs out there which does offer a true FX prime brokerage service. What we mean by this, is that we offer a service akin to that which you would receive from a tier one prime broker, albeit with much faster onboard times, and a far lower cost of entry than tier ones.

FM: Can you explain how FXCM’s prime-of-prime offering is different?

FXCM Pro: FXCM, as a true prime-of-prime broker, seeks to offer efficient and cost-effective access to a broad range of trading venues through a single account, leading to lower margin requirements and freeing up cash flow to be used in other operations.

When a customer connects through FXCM Prime, they sign an FX prime brokerage contract with us, and we act purely as a clearer. They are also obligated to sign legal contracts with each individual platform and are subject to their rules. This allows them to have a direct relationship with individual platforms but with the added benefit of being able to clear trades through FXCM Prime via a single NOP.

FXCM Prime clients only need to write to a single API, whether they are trading on a single venue or all of the venues we offer. Our pre-trade credit solution also provides aggregation, SOR, and TCA capabilities if required and all back office requirements are met by FXCM for our prime-of-prime clients.

Our prime-of-prime offering is not a mass-market business, and the majority of FXCM Prime’s customers are small and medium-sized institutions. We pride ourselves on providing comprehensive and tailored customer service. We have a sizeable team in our prime brokerage division – ensuring that our customers receive the best possible support at all times.

We’re also very proud of our on-boarding speed, with the majority of our clients set up and trading within four weeks, with a very high level of service provided once a client is live.

FM: What, in your view, is the biggest challenge for prime-of-prime?

FXCM Pro: One of the biggest challenges for both prime brokers and prime clients is how to manage credit lines efficiently across a range of platforms. The prices offered by different platforms vary significantly, meaning that customers may want to trade across multiple platforms in order to get the best prices or hedge their exposure effectively.

If a customer is allocated a net-open position of USD100 million, for example, and has access to 10 trading venues, some prime brokers can only offer USD10 million for each platform to ensure fair access and distribution of capital across trading venues.

This is not an efficient model. It limits a customer’s ability to trade on their preferred venue, and some may feel compelled to trade on a platform that isn’t offering the best price due to their inability to utilize their trading capital in full.

Some prime brokers have occasionally found themselves extending credit lines of USD100 million for each venue, exposing them to significant risk if their customers were to default. When replicated across hundreds of customers, these institutions become a potential source of systemic risk.

In order to mitigate this risk, FXCM Prime is underpinned by unique low-latency software that conducts a pre-trade credit check on every trade. As each user can connect to multiple platforms via a single account, the total number of open positions is closely monitored, and any orders that exceed a user’s agreed credit line will be automatically rejected.

FXCM Prime can, therefore, limit users’ total exposure, regardless of which platform, or platforms, they trade on. Pre-trade credit and post-trade credit checks are also performed on all venues to ensure that they meet strict criteria.

Technology and Third-Party Integration

FM: Can you elaborate more on the technology and aggregation side – which platforms are supported, APIs, liquidity, etc.

FXCM Pro: In terms of APIs, FXCM's Institutional API access offers professional and institutional users the ability to tailor pricing on a per instrument, per account basis. Following a mandate from our customers, FXCM’s liquidity management team can source the most efficient liquidity providers and partnering venues to match clients’ needs, be it single tickets on large orders, stickier pricing intraday on metals, and more.

Clients can automate their trading and applications via FIX, .NET, and Java, with functionality including all orders types, streaming market depth, and reporting based API solutions.

Using FXCM's connectivity and networking infrastructure, traders can also reduce costs and time to market, with increased connectivity speed in emerging markets and close proximity to FXCM’s matching engines enabling ultra low-latency connectivity.

FM: Are you planning to offer tech from third parties for  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, bridges, back office, CRM, etc. or do you have in-house solutions?

FXCM Pro: We have an ecosystem of partners and third parties which enables traders to easily access additional platforms and liquidity solutions. FXCM platforms and liquidity solutions are integrated to all major bridge providers, including OneZero, Gold-I, and PrimeXM, as well as a variety of third-party technologies including ECNs, platform providers, and charting packages.