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Screenshot of a breaking news alert e-mail from Q2 2017
As far as development within the retail FX technology sector is concerned, five years is a veritable lifetime.
Casting back ones mind to the latter part of the last decade, MetaQuotes dominated the trading platform segment among the vast majority of the world’s brokerages, having designed an entire brokerage solution which catered toward market makers, whose dealing desks often fixed the spreads and therefore trades were not delivered directly to liquidity providers.
Today, with the tables turned, and a large percentage of retail FX firms having adopted the agency model with variable spreads and straight-through processing (STP) execution in which trades are sent directly to the liquidity provider without a dealing desk, the MetaTrader 4 platform has maintained its universal popularity largely down to the third party software ecosystem that has been built by developers.
In particular, the liquidity bridge solution, offered by a series of independent software technology providers, has been a major factor in ensuring that traders can still use the familiar MetaTrader 4 platform with its renowned compatibility with expert advisers, whilst trading via an a-book execution model.
This week, however, MetaQuotes has dealt a potentially severe blow to such developers, having distributed an email to brokerages which details several reasons for adopting a new addition to MetaQuotes’ product range – the STP Gateway For MetaTrader 4.
This, according to MetaQuotes allows brokers to distribute traders’ orders to large liquidity providers.
The MetaTrader 4 trading platform allows the use of a hybrid business model to process A Book and B Book accounts. With the advent of the native gateway in MetaTrader 4, the use of the STP model has become faster and more convenient. All that is needed to enable connection and coverage with another MetaTrader 4 broker is a trading account on their server.
Indeed, this, in essence, takes the form of the liquidity bridge, which could have a dramatic effect on the businesses of external providers of such technology.
Whilst MetaQuotes still retains the lion’s share of the retail FX platform market, newcomers such as Spotware Systems’ cTrader, and application based Tradable have entered the market post a-book, meaning that no bridge is required for an agency model to be provided by brokerages via such platforms, thus theoretically reducing the cost per million, as an externally-provided bridge does not have to be capitalized.
MetaQuotes clearly aims this directly at the third-party market, stating that “The STP gateway is the first native ready-made connectivity solution, built directly into the platform. So brokers do not need to use any third-party software to connect to liquidity providers any more, thus avoiding various problems.”
The email to brokerages continues to assert that “The STP gateway is a part of the MetaTrader 4 trading platform. Compared with the third-party software, it provides higher speed, stable performance and advanced reliability. Technical support is provided by the trading platform developer, which means that any questions and problems are solved faster without any middle parties.”
“The brokers who already work with MetaTrader 4 will easily configure the STP gateway via MetaTrader 4 Administrator, so they don’t need to delve into more technical details of third-party connectivity solutions” stated MetaQuotes.
Continuing along the lines of cost, MetaQuotes’ email further explained that “One of the options is covering a part of traders’ orders, which provides greater opportunities for risk management. The covered volume is specified in the routing rules for each group of accounts. For example, if 50% is specified, 0.5 lots of the one-lot order opened by a client will be forwarded to an external server.”
The gateway is integrated into the MetaTrader 4 trading platform, and can be tested in the demo mode. It will process only the first 100 trade requests after the server start. The appropriate license should be purchased to experience a full-scale functionality of the STP Gateway for MetaTrader 4.
This is not the first time that MetaQuotes has embarked on an initiative of offering proprietary solutions in direct competition with the third party software firms which have built their products around MetaTrader 4. Just over a year ago, MetaQuotes accused four copy trading providers of hacking a MetaTrader 4 protocol, which resulted in one of such firms developing its own end to end trading solution and seeking other distribution channels.
In May 2013, MetaQuotes launched its own third party software marketplace, in order that all third party software developers should submit their software to MetaQuotes for appraisal before it is offered via the MetaQuotes market place. Indeed, by internalizing the bridge and going down the proprietary software route, MetaQuotes is taking this assault one step further.