Retail foreign exchange platform

Retail foreign exchange trading is a small segment of the large foreign exchange market. In 2007 it had been speculated that volume from retail foreign exchange trading represents 5 percent of the whole foreign exchange market which amounts to $50–100 billion in daily trading turnover. The retail foreign exchange market has been growing. In general retail customers are able to trade spot currencies. Due to the increasing tendency in the past years of the gradual shift from traditional intrabank 'paper' trading to the more advanced and accurate electronic trading, there has been spur in software development in this field. This change provided different types of trading platforms and tools intended for the use by banks, portfolio managers, retail brokers and retail traders.

One of the most important tools required to perform a foreign exchange transaction is the trading platform providing retail traders and brokers with accurate currency quotes.



History and new developments

Since 1996, when retail foreign exchange trading was first introduced, several brokers who lacked the sufficient tools developed their own trading platforms tailored specifically to their needs. The 1st retail FX brokers were MG Forex, The Matchbook FX ECN, GFT, CMC Markets, Saxo Bank (then known as Midas) and a handful of others. Most except CMC, Saxo & Matchbook FX were based on the ACT foreign exchange trading technology and GUI. These platforms were good enough at the time but required constant investments in research and development and this development cost too much. This was the first wave.

The second wave was in the early 2000s: several software companies entered the retail foreign exchange trading market by launching their own versions of trading platforms, like Apbg Group, Ctn Systems and MetaQuotes Software. Typically these versions were cumbersome for both front-end users (retail traders) and back-end users (retail brokers) due to the misunderstanding of the developers about the foreign exchange market and also because of the insufficient programming tools/languages at the time. Simultaneously most of the retail brokers kept using and developing their own systems as they waited for better platforms which were yet to be developed.

It is only in the last couple of years that the advanced trading platforms started to emerge. Platforms like Multicharts, cTrader put much stronger emphasis on the user interface (GUI) making it more accessible to the retail traders while making trading on it very simple and intuitive. Platforms started to focus on social networking as a way to attract new users, after the emergence of Facebook, Twitter and other social media networks. Social trading has been growing intensely in the last years, especially after platforms like Currensee, Zecco.com, eToro or FXStat appeared.

Moreover, a very strong emphasis was put on the back-end which allowed the retail brokers better control over their operations, better reporting and accurate system and ways to manage marketing campaigns.

Gradually this wave is replacing the previous second wave with a major shift now to the friendlier and more intuitive systems of the third wave which according to Aite Group are necessary in order to maintain growth.