LeapRate's Daily Forex Industry Newsletter
Join now to receive first access to our EXCLUSIVE reports and updates.
Screenshot of a breaking news alert e-mail from Q2 2017
There was once a time when algo trading platforms were an external component, an added retention tool which engaged clients for longer and worked in tandem with the trading platform.
In these days of integrated, seamless trading systems, this is becoming increasingly an obsolete model, eschewed by technology providers and brokers alike in favor of one-piece, end-to-end solutions.
One of the pioneers of this methodology is Tradency, a firm whose Mirror Trader system trading platform enjoyed success in its own right, before the firm took the initiative to design and build its own enterprise brokerage solution, which was launched last year.
In order to take a very close look at how this complete solution has positioned itself in an increasingly competitive business sector, LeapRate today spoke to Lior Nabat, CEO of Tradency to detail the finer points of the firm’s achievements during the past year.
A year has passed since Tradency became a vendor of an entire enterprise brokerage system – How has this worked out, and which regions/types of firms have taken it up?
Our end-to-end strategic move has strengthened our offering considerably, since we can now offer our clients a complete tailored solution with enhanced capabilities supporting of new features. Our Mirror 360 solution is a single technology source which allows us flexibility and independency at the same time as we continue to develop and support our open architecture and cooperation with 3rd party vendors.
During this passing year we have focused our efforts in adaptation of our core offering to suit the needs of different market segments, specific efforts have been put towards medium sized brokers. We have designed a bespoke package for this market segment needs: Mirror Trading cabalists, API advanced connectivity, intelligent Risk Managements, reports module, ability to seamlessly connect to other complimentary advanced systems, etc..
Our Mirror 360 offering positions Tradency in a very dominants and stable place as we can now offer medium sized brokers a comprehensive off-the-shelf package that answers all their needs and then some.
Another market segment we have focused on this year is the large scale brokers. We have put a lot of R&D time, work & effort, and this coming month we will be presenting a back office version which answers the needs of a large scale broker such as Invast Securities. This backend system stands with advanced aggregation demands, is A/B book compatible, complies with global regulation demands and much more..
With the upcoming completion of the Mirror 360 adaptation to this market segment we will first launch with a major, A-list Japanese broker (Invast sec.) and will later offer our end-to-end, stable, innovative solution to other large scale market players.
Capitalization of trading platforms and brokerage solutions is very competitive – how has Tradency costed its solution, and what is the key to the firm’s success in Japan/APAC?
We all have witnessed a challenging year for the FX market, and Tradency responded accordingly. In places where there was a need to modify our costing structure, we tried to do so and accommodate our customers, especially the medium sized brokers. We have also used our Mirror 360 solution to offer brokers a package that, cost wise, lowered barriers of entry and entry costs. We have cut the integration derived costs and by that, were able to offer a very competitive package to medium size brokers wanting of an end-to-end solution.
As for Japan. Tradency is one of the very few foreign companies that have managed to penetrate and secure a leading market position in a very local oriented market. Tradency’s success in Japan can be attributed to 2 main factors:
Focus, investment and professionalism thatTradency have shown as a company. These were a conscious choice taken by us in order to crack open this market, in light of the fact that most of the global activity of theFX retailmarket is in Japan. Therefor we have invested our resources, learned and made some modification in order to adapt to the Japanese business culture and state of mind. We are proud that the investment bears fruit and has positioned us as a leading technology provider in Japan.
The Japanese market suites perfectly with Tradency’s core competitive advantages. We are a pure technology company with strong technological abilities which produces robust & reliable systems that work over many months without any incidents. Our systems and work ethics are based on very high standards of maintenance, operations, performance and service. Today, Tradency is the biggest, most successful, foreign platform provider in Japan in both number of clients (end-users) and in actual and potential volume. From the list of selected top-tier broker, 3 are Japanese brokers (Invast Sec, CTFX, FX Prime) that are prominent members of Japan’s top 10 “A-list” brokers.
Tradency is also the first system trading technology provider to be registered by the JFSA as an investment advisory business. This last milestone, defines mirror trader as a popular product which has been recognized by brokers, clients and the JFSA as an approved financial tool in Japan.
Do you plan to leverage the FX mirroring concept to other assets?
Following Mirror Trader’s success in the FX market, we have identified a market demand to produce similar solutions for other assets markets. Today our offering already includes trading FX and CFD assets of indices, commodities and single shares In addition we have learnt the different markets, and as a result we understand that different assets have different demands and require various designated developments. We intend to expand our shares and commodities CFD to other geographies such as Japan.
We will also be expanding our product line with entrance to new assets markets with a dedicated Futures solution (which is already in stages of development) and a solution to the Stocks market of its various kinds.
There is a vivid interest form the Stocks market for a Mirror Trading solution that will become the next generation mutual funds and we intend to provide it.
Talk us through how Mirror Trading can be a great way to provide quality signals and information to traders in order that they can conduct their own risk management?
Quality Signals is the key for Successful algo-trading (system trading) and it’s a clear differentiator between Tradency and other providers. The information jungle is great for entertainment and lifestyle decision making, but when real money is in question, we believe a different approach is needed. This is why Tradency offers a controlled, protected & monitoredalgo trading strategies.Mirror Trader protects broker’s clients from dubious tips and trading decisions. All information shared within the Mirror trader platform is generated by tested & proven strategy providers which are being monitored & regulated continuously.
The quality of the knowledge shared within the Mirror Trader platform is directly related to the quality of the strategy providers offered by the platform. In order to become a strategy provider at Tradency, a long and rigorous process isneeded.
Mirror Trader is, and always was, a market leader. As such, we continually offer our clients an edge that is different and unique. This year we intent to offer our clients with high level algo strategies developed by financial institutions such as hedge funds, asset management companies, and some strategies that are traded by world leading banks. This premium strategies will benefit both users and brokers. Users will gain top-notch, diverse information which they cannot attain anywhere else. Brokers will gain increased trading activity which will also have a positive effect on their traders’ lifespan.
Customer acquisition cost vs. customer engagement cost is a conundrum for most brokers. What is your advice?
During the last few years and in light of the many changes the on-line trading market has gone through, we have constructed 2 business methods that have proven to be successful for both brokers and Tradency.
The first is a holistic view of Mirror Trader as an enabler and maximizer of the broker’s conversion funnel. This method is based on a solution which increases brokers’ bottom line by innovatively targeting the 5 most important elements of the conversion funnel and the client life cycle. Each one of these elements profoundly advances the number of active traders, their quality of use of the system and increases trading volume:
Accelerated Conversion – it’s easy to select strategies and become an active trader which makes the Mirror Trader an excellent entry point to on-line trading. This fact is reinforced by the results of a recent survey conducted among 1000 live, active users more than 90% say the Mirror Trader platform is easy to use.
Increased conversion ratio – the Mirror Trader serves as a gateway for a new segment of traders since it targets the clients which do not know how to trade and do not have sufficient motivation or time to trade by themselves. Furthermore, Mirror Trader offers alternative for those potential clients which were unsuccessful in their demo trading.
Volume creation – on average each user in the Mirror Trader platform selects 5-7 strategies unlike a manual user which can be compared to a trader holding only one strategy.
Longer lifespan – positive user experience creates a satisfied customer. Selecting algorithms makes much more sense for users since they need only to evaluate parameters which they understand easily. The Mirror Trader boosts users’ confidence since it enables them to understand why they chose a specific strategy, enhancing a sense of certainty.
Reviving dormant accounts – reactivating clients that have gave up trading. In the Mirror Trader the users change their trading experience from manual traders to algorithm traders presenting them with a new opportunity to pick up on their on-line trading activity.
The second method is based on the understanding that Mirror Trader can be combined with the broker’s proprietary trading platform in order for the trader to enjoy the benefits of both platforms together. This combination increases the trader trading activity and lifespan dramatically.
The most prominent case for this method and its many advantages can be seen with FXCM. Late 2013, FXCM launched a new business model, an hybrid model in which traders are using Mirror Trader alongside the TS2. This move was focused on the mass market. FXCM and Tradency jointly developed the project strategy, targeting to reach tens of thousands of new accounts. 12 months into the project, FXCM has achieved 12,448 Mirror Trader active clients, a result that had surpassed the initial project expectations.
What’s next for Tradency?
This year we expect a significant leap forward with our prosperity in the FX market. We are further developing our end-to-end, Mirror 360 solution.
We are also developing our next level (HTML5 based) platform that will expand to offer intelligent manual trading alongside the classic Mirror Trading option. The new platform will be able to provide customized solutions for large scale brokers such as FX index trading and Super manual trading tools.
We are also expanding our operations to other assets markets and expect to see significant market seizure.