Who will find value
in this e-book
With the introduction of fractional trading coupled with the race to zero commissions, the competition for clients has become immense. Brokerages that don’t offer fractional stock trading might be disadvantaged due to their lack of adaptability.
In this white paper, we’ll break down technology requirements for fractional trading and explain how it provides brokers with a dramatic competitive differentiator.
What you will learn from this book
1
What is fractional trading and how does it work?
2
How can stock brokers benefit from it?
3
How brokers can limit their risk exposure?
What is fractional trading and how does it work?
At its core, fractional shares trading is the concept of getting a smaller piece of security or round lot and being able to trade it as a client. This allows investors to diversify their holdings if they have a smaller portfolio. It is also much more affordable than buying a whole stock, accessible to investors with limited access to standard investment opportunities, and feasible for more capital to flow into the market.
How can stock brokers benefit?
Fractional shares trading gives brokers a definite competitive edge. It gives their traders the chance to invest in stocks they may not have been able to previously, as well as having increased control over their decisions due to more available options. For brokers, implementing this workflow results in an expanded and more varied customer base, which leads to more assets under management.
Many brokerage firms have already recognized the introduction of fractional shares trading as a key selling point and the competition for clients combined with the race to zero commissions has become formidable. Stock brokers that don’t provide this service may be disadvantaged due to their inability to keep up with the market.
How can brokers limit their risk exposure?
However, brokerages must carefully consider implementation strategies when it comes to managing fractional inventory. As fractional trading might be limited by execution venues, there’s a need for an internal inventory management tool. Implementing such a tool for managing orders and inventory might be quite complex from a technological and regulatory perspective.
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Download this white paper to find out how brokers can support fractional orders, how to manage fractional trading within an OMS, how an OMS routes fractional orders, and ways to limit brokerage’s risk exposure.
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About the author
Michael Sprachman is the VP of Brokerage Trading Platforms at Devexperts. Michael has over 15 years of experience in the capital markets industry, on both buy-side and sell-side trading platforms, focused on U.S. market. He has extensive knowledge of the trade through the settlement lifecycle, including STP and high-touch workflows, compliance reporting, and financial protocol languages. Previously, Michael has held Product, Delivery, and Project manager roles at Fidessa and OpenText.
Michael Sprachman
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Who will find value
in this e-book
Are you a start-up forex or crypto broker, a forex dealer, a fintech software developer, a financial analyst or a trader? This book is for you. From Order Execution 101 to 18 comprehensive execution scenarios, you will understand how a broker can improve their order routing and execution with just one item of software—a liquidity aggregator.
We recommend division managers in broker houses to use this book for onboarding new team members, from dealing and risk management to support departments. This book is filled with useful details and diagrams to help readers memorize what they learned, and it will be helpful in onboarding new members of your brokerage team.
What you will learn from this book
1
You will get to know how prices are aggregated and how it affects execution
2
Understand the order sweeping algorithm workflow
3
Tie together order types, their time in force, and how they are processed
4
And practice exploring daily tasks of a liquidity aggregator
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Reviews
Many people associate liquidity aggregators with a metaphor of a switchman. The devil is always in the details, and simplifying can cost you millions. Most underestimate the degree of complexity, as well as the risks associated with numerous moving parts. This book offers an in-depth analysis of the algorithms and their processes. Take a look at what you should expect if you decide to engage with a liquidity aggregator. In this book, several atypical execution scenarios are detailed in great detail. The authors and the whole Devexperts team deserve accolades for their efforts!
The book gives Forex professionals a unique opportunity to look under the hood of perhaps the most complex module in the “risk management” mechanism. This knowledge gives the risk manager superiority in both day-to-day operations and in the selection of counterparts. And those who want to implement order-sweeping algorithms do not need to reinvent the wheel, but rather refer to Devexperts for a straightforward, academic implementation.
Sometimes you need to better understand how execution works rather than just its principles and ideas. The book gives you these lenses, it gives you a set of examples that are equivalent to open sourcing the actual algorithms. Except you don’t need to be a coder to grasp it.
About the author
Evgeny Sorokin is CPO of Software Engineering at Devexperts. Having implemented trading platforms with tens of brokers from around the globe, he gained knowledge of how different departments of brokerages operate from the technology perspective.
Evgeny Sorokin
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This Book is For
Those who want to understand the mechanics of FX trading, the technology behind it, and to reach Level 80 in broker risk management. It is intended primarily for start-up brokers and those considering launching an FX/CFD or even a crypto brokerage, and for brokerage house employees wanting to increase their market knowledge. This e-Book aims to boost brokers’ confident in running their own FX brokerage.
We recommend brokerage house managers keep this book handy and also forward this link to their colleagues in other departments, especially to those involved in dealing and risk management.
What you will learn from this book
1
A behind the scenes look at broker operations related to liquidity management and liquidity flows in the Forex market
2
Practice by following and untangling a quote’s path from the moment it’s generated until it’s matched with another quote
3
An understanding of the pros and cons of working with several liquidity providers, or with one prime broker instead. You’ll walk away knowing the difference between these setups and their associated challenges
4
A greater understanding of how to conduct business with LPs to make them happy and benefit your brokerage in return
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Reviews
This is a great E-Book that covers not only the basics of liquidity aggregation but some real fundamental issues that start up brokers need to comprehend when they are setting up their companies base trading infrastructure. Mistakes around such a critical aspects in a trading company as liquidity, the management of it, and the collaterization needed are very dangerous in the short, medium, and long term. This book will help all those that read it come up the curve to a stronger position of knowledge very quickly. I would dare say that not a single executive or senior manager at any brokerage firm shouldn’t understand these concepts. This is a great work, very much needed, Bravo!
Evgeny has done a great job compiling all of this information into one place, something I have not seen done before.
It’s clear and concise, covering the important aspects people in the FX industry should know and understand. There is useful content for everyone from new entrants all the way up to industry veterans.
Without this e-book it would take a long time to gain all this knowledge. I believe that everyone who reads this book will find it enjoyable and take away new information and meaningful insights into how the Forex market operates.
Thorough tutorials on B2B Forex technology such as liquidity aggregators are a rare thing to find. It’s not impossible though, and “The Ins and Outs of Forex Liquidity Aggregation” is a great example. This textbook by Devexperts is something I have always valued: in-depth, actionable and frank insight into forex pricing, execution, and hedging strategies.
With an unbiased narrative and multitude of clear and concise examples, Evgeny provides an excellent explanation of advanced problems in the fragmented OTC space.
Highly recommended for anyone who is willing to better understand trading with liquidity providers.
About the author
Evgeny Sorokin is CPO of Software Engineering at Devexperts. Having implemented trading platforms with tens of brokers from around the globe, he gained knowledge of how different departments of brokerages operate from the technology perspective.
Evgeny Sorokin
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What you will learn from this book
1
Get the understanding of the behind the scenes broker’s operations related to price risk management and practice by solving simple but real-world examples.
2
Find out the difference between the A/B/C-Books, the challenges related to these models, and get a greater understanding of risk acceptance or transference.
3
Fill gaps in financial literature and understand the anatomy of trading and risk management at the broker’s side.
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Reviews
Usually explanations of the common broker practices to a wider audience offer a misleading oversimplification. This book is a very in-depth and insightful read for anyone who is interested in trading and who has ever wondered what happens behind the scenes at their brokerage.
This book is aimed at those who would like to start their own brokerage, at backoffice, customer care, IT, and dealing desk employees. It will be useful also to professional traders, willing to know how FX dealers operate.
Non-professional traders and investors, especially beginners, can be split into two camps: those who believe that FX brokerage business is rocket science, and those asserting it is a fraud.
This handbook explains what the business of an FX brokerage really is, in a structured and detailed way, while still easy to understand. It is useful for brokerage personnel too, as it may help them to develop a broader perspective on their everyday work.
About the author
Evgeny Sorokin is CPO of Software Engineering at Devexperts. Having implemented trading platforms with tens of brokers from around the globe, he gained knowledge of how different departments of brokerages operate from the technology perspective.
Evgeny Sorokin