For forex brokers, copy trading and managed trading accounts provide an opportunity to market services to clients who aren’t interested in self trading. The offerings can also be used to attract traders who are interested in trading themselves, but haven’t been successful at it, however want to remain active in the market. Such accounts are provided in several different forms. Among them includes social trading where users follow and copy trade leaders, signal providers of which traders link their account to automatically initiate trades from strategy providers, as well as managed accounts where a trader simultaneously executes positions on behalf of a group of investors.
Popular offerings, copy and managed trading has begun to gain the scrutiny of regulators over the last two years. Specifically, regulators have questioned whether copy trading is a form of account management that requires additional asset management licensing from trade leaders, brokers, platform providers and strategy providers. As a result, the industry has begun to create models that meet regulatory requirements, but remains flexible to both brokers and account holders to retain copy trading as an ongoing business generator.
Among products coming to the market is SeerHUB. Created by the team behind the SeerTrading automated trading platform, SeerHUB is a hybrid of signal providers, virtual servers, strategy automation and Expert Advisors (EA).
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The main achievement of SeerHUB, and why its founders as well as brokers who have reviewed the product believe that it fits regulatory requirements of copy trading, is that the system puts the control of trading in the hands of the end-user account holders. SeerHUB works like an EA marketplace, in which users can select among the various strategies being offered. Upon choosing a strategy, the user links their account to run the automated strategy.
Unlike with signal providers, where the account holder links to the provider for the initiation of new trades, SeerHUB is more similar to EAs, where users take control of a specific automated strategy to power their trading. The difference is that rather than the trader downloading the EA onto their MetaTrader 4 platform, SeerHUB users initiate a server instance of the SeerTrading platform using the selected strategy. As chronicled in the past, the SeerTrading platform takes into account a user’s overall account balance and margin requirements. The result is that SeerHUB strategies are made to be continually optimized based on the size of the account, rather than fixed positions triggered like a standard EA. As the server instance is controlled by the end-user, they can also risk adjust the strategy to their accounts with ongoing position sizing.
Speaking with Enis Mehmet, Director of SeerTrading, he explained to Forex Magnates that they launched SeerHub as a way of using their institutional grade algoritmic trading platform, “to open up to a greater audience.” Creating SeerHUB allowed them to leverage their existing algorithmic infrastructure while offering a product suitable for brokers and their clients. The product will also potentially provide an opportunity for their institutional quant traders to open their strategies to SeerHUB users in the future. Currently, the existing strategies were developed by SeerTrading’s in-house group of quants.
In order to be as client neutral as possible, Mehmet explained that SeerHUB is being offered to brokers as a licensed product with no volume-based compensation. The virtual server fee can either be passed onto the end-user client or covered by the broker and an incentive for their traders to use SeerHUB. Currently, SeerHUB is available to brokers as a plugin to MetaTrader 4 as well as via a broker’s native API to their trading servers. In addition, Currenex integration is also being developed.