Foreign exchange technology provider Integral Development Corp, has announced the results of its 2014 Retail FX Broker Survey, revealing a desire for more sophisticated risk models by retail FX brokers, according to an Integral company statement.
On the heels of the results of last week’s 2014 Retail FX Survey, which entailed a variety of key findings, challenges and growth prospects facing the overall market, retail FX brokers made their voices heard with the desire for a hybrid risk model (a combination of A-book and B-book). The survey itself is compiled by a composite of senior personnel derived from FX retail brokers globally and represents an accurate barometer for the pulse of the industry.
Hybrid Model Favored over Standard B-Book by Large Margin
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Particularly of note was a finding that indicated 58% of respondents opted for a hybrid A-book and B-book model as their preferred solution in 2014. This was by and large widely lauded as the best option, besting the standard B-book model by a considerable margin. Ultimately, the prospects of increased competition from rival brokers, the specter of rising operational costs, and mounting volatility were the primary drivers for this preference.
According to Harpal Sandhu, CEO, Integral Development Corp in a recent statement on the survey, “We are encouraged by these findings since they confirm our view of the retail FX market and where it is headed. It also validates the direction of our product roadmap and innovation. The flexibility of a hybrid risk model clearly trumps those of pure A- or B-booking, but as the more complex strategy, it comes at a price. FX brokers need to carefully review their setup for operational efficiencies and find a technology partner that puts them in control so they can make the necessary decisions quickly and decisively to provide superior customer service. This is a marathon, not a sprint.”
Retail Brokers Make Liquidity Preferences Known
In deciphering the overall trends of the survey it is abundantly clear that retail FX brokers are mindful of challenges in 2014, as indicated by a more comprehensive risk model. In addition, approximately 64% of respondents favored at least six liquidity providers as an optimal number to run an FX broker. This echoes sentiments by participants that indicated an awareness for liquidity constraints. “Integral’s innovative solutions enable brokers to connect to multiple sources of both bank and non-bank liquidity ensuring them best execution, and we provide the risk management tools to put FX brokers in full control of their FX business,” Sandhu added.