Denis Sukhotin

Want it done? Do it yourself.

Recently we announced our acquisition of spot FX aggregator Quotix, a company that has been on our radar for quite some time. We have been known to work with other tech companies in the past, normally in an advisory capacity, but this is the first time that we have taken the plunge and decided to take one on board. It’s a big move for us, but also the next logical step on the path that we have been pursuing, especially since transitioning to an FX Agency Model of order execution in 2012.

There are many differing views regarding when a broker should do things in-house, and when it’s best to outsource. The industry that has sprung up around the brokering of trades; from education and marketing, to technical analysis and algorithmic coding, is dependent on FX firms outsourcing certain key services. Maintaining a healthy sector of third-party offerings is conducive to innovation, and we have always tried to maintain a balance between off-the-shelf and proprietary in everything we do. If there is something out there that does the job well and has achieved a network effect, like MT4 for example, we’ll of course use it, and indeed tailor it to our own business model. However, when we have requirements that no one out there seems able to meet, we won’t hesitate to develop in-house solutions, as was the case with FxPro Quant, FxPro SuperTrader and most recently FxPro WebTrader.

The acquisition of Quotix is different though. It means much more to us than just doing something in-house that we previously had to outsource. Bringing Quotix into the fold, and empowering them to develop their technologies alongside our own, allows us to move a little closer to the goal we have nurtured since FxPro was founded. That goal is to be able to offer professional trading services for retail and institutional clients, as well as other brokers, and to bring all these clients ever-closer to the sources of liquidity as we continue grow as a company.

The acquisition of Quotix certainly provides us with several competitive advantages in terms of pricing and trade execution, which our clients will undoubtedly benefit from. But it also allows us to venture into the world of liquidity aggregation and provision, which has been a long-term goal for us. The aim is to be able to properly cater for other retail brokers, institutional brokers, hedge funds, banks and corporates, as well as the traditional retail FX clientele that we are known for.

The size of our client base and the volumes we command have never been the be all and end all for us. From the outset these things have been a means to an end; namely the desire to influence the industry as a whole and to ensure its longevity. It’s one thing to be able to make profits for five to ten years, and quite another one to still be around in fifty to a hundred. For us the longevity of this industry has always been dependent on removing conflicts of interest between broker and client, as well as any association the forex industry may have with the world of online gambling and spread betting. We have been shouting this from the rooftops for some time now, but our strategic acquisition of Quotix now empowers us to actually be able to do something about it other than just leading by example. Quotix opens the doors for us to begin offering prime-of-prime aggregation services in an industry that is still trying to figure out how to make agency execution profitable.

One of the traditional obstacles that smaller brokers have faced when attempting this transition has always been the sourcing of liquidity for smaller, highly leveraged trades from prime brokers that do not specialise in these services and are not best positioned to provide them. This has been the main stumbling block for wider adoption of agency execution across the retail FX industry as a whole, even after the tide of public opinion regarding the market making model has noticeably shifted.

With Quotix on board we are now in a position to offer the kind of aggregation and liquidity services that often elude smaller retail brokers owing to their smaller volumes and inability to establish credit relationships with prime brokers. The solution was always going to be one that we as a sector found for ourselves, and we believe that this is the way forward for an industry that has been experiencing a crisis of identity of late.

We plan to offer other smaller brokers and those just getting started the opportunity to align their interests with their own clients by also offering FX agency execution. The next generation of traders coming to FX are wilier, better informed, and are demanding no dealing desk execution from the get-go, whereas an earlier generation of traders had to actually be educated on the differences. Taking the longer view has always been our game, and we believe that being able to cater to these new traders, as well as empowering others to also be able to do so, will benefit us all in the long run.