Bridge technology for brokerage companies: what is offered on the market
We all know that a brokerage company cannot exist without introduction of modern technologies. Today’s process of completing trading operations is fully automated, and we can perform stock transactions sitting at the computer at home. It is no longer necessary to call the broker with a request to make a deal. It is enough to press a few buttons and do it yourself. Well, the broker is obliged to execute these orders with the highest possible speed. To put it simply, the broker should be a “bridge” between the client and the market, and the speed of passage through this bridge determines the success of the trade operation.
The role of this bridge is carried out by the bridge technologies, which connect the broker’s server with the clearing center. All orders from the traders pass through the following logical chain: Opening a transaction – processing a transaction on the broker’s server – sending the transaction to the market – processing the transaction in the clearing center – execution of the order.
As we can see from this example, the way of performing a trading operation is not easy at all and at first glance, it is not fast. But in fact, there are technologies that are able to execute your trading operation in a matter of a second. In order for the broker to supply quality trading conditions, it is necessary to quickly implement transactions without additional slippage.
However, the speed of the orders execution is only one of the indicators of qualitatively bridge with dealing software technology. Such programs should still have the ability to analyze and control all the trading operations. Thus, the software must both execute and track the transactions and demonstrate the trading result. Every beginner broker depends on the results of his traders, and if everything goes on its own, business losses can grow and eventually the company will have to close. To avoid this, you need to monitor and distribute transactions between the internal overlap and the market.
Let’s be frank: every broker closes transactions between his customers (ideally) or himself is the second party that executes transactions. If all the transactions are processed according to this principle, the result will not be achieved, and the company will last for maximum of a year, will get the status of “kitchen” and will leave the market. But if risky transactions are overlapped in the market, this will significantly reduce the responsibility, because the trader will receive market profit, and the broker – commission. This is the approach I recommend all the brokerage companies to use. But for this, the dealer must have software that will track such transactions. Ideally, this software should be combined with bridge technologies. There are already many programs, technologies, and also companies that have implemented this function on the market. Today, it’s easy to “ask Google” about the list of similar companies:
As you can see, there are enough companies that implement all the transactions of their customers on the liquidity bridge system. That’s why we need to determine what exactly is important for the bridge technology, and only then to choose the necessary software.
First of all, I would highlight the possibility of setting up a methodology for executing orders for the a-book and b-book systems.
A-book allows you to immediately implement trading operations on the side of the clearing center, which speeds up the transaction and allows you to enter the market at more favorable prices. This approach should be used for those clients who trade using algorithmic techniques, have increased volumes or conduct trading on exotic currency pairs.
B-book methodology allows you to customize the internal execution, as well as install additional charters and slippage. This is the main tool for broker’s earnings.
In addition to choosing the methodology for orders execution, the bridge must be a large database of all open transactions, the analysis of which allows you to determine which of the methodologies to connect to a trading account.
Thus, the additional functionality should include:
- Analysis of current operations: the program must have a database in which the current results of clients are displayed in real time. Such a function allows the broker’s dealing to respond more quickly to the increased trading risks. Here an account, transaction execution procedure, entry and exit levels, floating p/l, as well as the retained commissions are displayed.
- Analysis of transactions in the context of each asset: similar to the previous paragraph, you can find the current result in the context of each asset. This gives an opportunity to know which of your assets is “skewed” and needs to be dig through, and on which on the contrary a profit is formed.
- Ability to connect to the mt4 bridge: for a faster dealing response to the changes in situation in the program, there must be a built-in terminal that will allow you to instantly make trading transactions to overlap the risks.
- The ability to combine different trading accounts into groups: this function allows you to combine different clients and their trading accounts in certain categories (by amounts, trading assets or trading methods). So, if you want to track algorithmic traders, you can create a condition (template) that will analyze the trade and add to the group.
- Creating templates: this parameter actually allows you to create the necessary set of logical conditions that automatically unite clients into groups or become reliable tools in the analysis of various types of customers.
- Creating automatic transaction execution rules: this parameter allows you to customize the work of trading transactions using the a-book and b-book methodology. You can specify the necessary conditions for transactions to be delivered immediately to the market. This functionality reduces risks. Clients who have led, for example, an aggressive trading will fall under individual conditions.
As you can see, in the market there is still software, which is a profitable technical solution for both brokers and their clients. It all depends on the goals that the brokerage company sets. It is clear that the trader cannot control this process, but if the broker easily displays your profit, it means that the processing and execution of orders goes exactly according to this principle.>