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Start Your Own Brokerage
- 1. START YOUR OWN BROKERAGE PRESENTED BY
- 2. BOSTON TECHNOLOGIES Boston Technologies is the inventor of the first commercial MT4 bridge and Start Your Own Brokerage (SYOB) package Established: April 2007 Revenue growth year over year Developed Network Infrastructure with data centers in New York NY4, London LD4, Tokyo TY3, and Hong Kong Platforms supported: MT4, FIX API, HotSpot, Integral, Currenex, FXAll, FXone, First Derivatives, FlexTrade, 360T, and EBS Direct Headquartered in Boston with offices in New York, London, Tokyo, and Shanghai 2
- 3. WHY START AN FX BROKERAGE? Foreign Exchange Trading (Forex or FX) Generates $5.3 trillion per day in Trading Volume No limit on growth ceiling 24 hour a day revenue opportunity FXCM & Gain Capital are publicly traded High margins, minimal startup capital and infrastructure Fast to break even 3 $ 3.47 Billion $191 Billion $437.4 Billion $5.3 Trillion NYSE Equities Futures Forex
- 4. IB VS. SYOB Introducing Broker Your Own Brokerage Limitations: No Business Ownership No Control of Messaging Revenue Sharing Revenue Generation Example: $500MM in Trading Volume/Month Example: Average 0.1 pip commission or rebate IB Revenue = $5,000 Advantages: Own Your Own Business Build Your Own Reputation Create Your Own Revenue Potential Revenue Generation Example: $500MM in Trading Volume/Month Example: Average 2 pip mark-up Broker Revenue = $100,000 4
- 5. START YOUR OWN BROKERAGE VS. WHITE LABEL Your Own Brokerage White Label Own Your Own Business Build your own equity An extension of an already established brokerage More Control Customize your own business Little control with no ownership Unlimited Sub White Labels Receive a share from unlimited white labels Can not offer sub white labels No Conflict of Interest No ties to a specific broker Direct competition with the broker Greater revenue Opportunity Unlimited growth Broker shares in revenue 5
- 6. FX BROKERAGE STARTUP NEEDS 6
- 7. INCORPORATION OPTIONS Level Sample Jurisdiction Time Capital Requirements Additional Fee Unregulated Seychelles 1 week $0 $2,500 Regulated Low Regulated - Medium British Virgin Islands Cyprus 3-6 months 6 months $10,000 for license $100,000 in account EUR 200,000 (STP) EUR 1,000,000 (DD) ~$5,000 $45,000 Regulated - High United Kingdom 6-12 months EUR 250,000 (STP) EUR 1,00,000 (DD) ~GBP 40,000 7
- 8. TYPICAL MT4 BRIDGE / PLATFORM STRUCTURE 8
- 9. METATRADER 4 (MT4) TRADING PLATFORM MT4 released in 2005 2.5 Million FX Traders Use MT4 Everyday Leading Platform for Expert Advisors (EAs) Accessible and User-friendly Interface Comprehensive Trader Features and Functionality Includes Graph; Pre-set Indicators; Mobile Stable Internet connection in poor conditions 9
- 10. AGENCY VS PRINCIPAL Agency (STP) Model Principal(Market Maker) Variable spreads that typically widen during news Predominantly fixed spreads, sometimes even 4-digit prices. Freezes during the news No conflict of interest between Broker and Trader Inherent conflict of interest between Broker and Trader as Brokers P&L is dependent on users profitability No re-quotes, 99.7% execution ratio Typically requotes, rejects for larger orders and uncomfortable flow Comfortably executing high frequency, algo (EA) trades Difficulty handling high frequency predatory Flow Typically has issues with offsetting small trades(<2 st lots) due to high processing costs Typically has issues accepting larger size orders Investment in infrastructure and middleware is required Less expensive infrastructure (only MT4 server required) Consistent profitability makes company attractive to potential investors Monthly P&L swings can cause inconsistent and volatile profitability picture Model preferred by regulators, less capital intensive Requires high capitalization in regulated environment, more reporting 10
- 11. STP REVENUE POTENTIAL Revenue forecasting assumption adding 10 new traders per month: 1. Avg. Deposit: $5,000* 2. Avg. Trade Volume Multiple Low: 500X (manual traders) High: 1,000X (algo traders) 3. Avg. Markup: 2 pips (1 pip per side) $- $50,000 $100,000 $150,000 $200,000 $250,000 $300,000 $350,000 $400,000 Month1 Month3 Month6 Month9 Month12 Month15 Month18 Month21 Month24 Month27 Month30 Month33 Month36 Revenue - Low Revenue - High *ForexMagnates **Estimate based on forecasting example Monthly revenue of $180K to $360K $4 million Annual Business After 3 Years** = 11
- 12. Incorporation / Corporate Banking Legal Framework Custom Branded MT4 Trading Platform Hardware & Datacenter Hosting to run the platform (NY4;LD4;TY3,HK) Robust and fully customizable reporting & BackOffice accounting 24 Hour Real-time monitoring Risk management software White-Label Options Access to our experience and FX/MT4 expertise Personal Account Executive FX, Metals and CFD liquidity BOSTON TECHNOLOGIES TURN KEY SOLUTION 12
- 13. One Point of Contact: Boston Technologies Partnerships designed with mutual incentives Take advantage of BTs experience with other customers Compete with same setup as any large brokerage ( FXCM, Gain..) Proven leader and innovator of FX technology Access to our best in class network of trusted partners BT SYOB PACKAGE BENEFITS 13
- 14. HIRE EXPERIENCE Source: http://money.cnn.com/2012/08/09/technology/knight-expensive-computer-bug/ Software bugs $400 million bug - Knight Capital 2012 catastrophic event Leverage an entire company of experts to avoid: Human configuration mistakes Price feed from unreliable vendors Price spikes, price interruptions No backup / disaster recovery plan
- 15. TECHNOLOGY AND LIQUIDITY COSTS 15 Item DIY (Do It Yourself) cost Managed Provider Hardware 3 dedicated machines Buy top of the line hardware (live+demo+backup)+ delivery +setup: ~$9,000 Lease top of the line hardware: (live+demo+backup)+ delivery +setup: ~$10,000 over 3 years Hosting 6 Units Colocation facility (+power + network): Buy full rack (42-55 Units) ~$10,000-$15,000 per month 6 units (+power+network): ~$1,500-$2,000 per month Plugins PAMM Plugin ~2 months development + QA @$40 per hour ~67,000 $1,500 per month off-the-shelf 24 hour support 3 shifts, 1 full time person per shift @ $40,000/year ~$10,000 per month $2,000-3,000 per month Web Dev (Trader Room) 1 person @30,000/year ~$2,500/month $2,000 setup, $600 monthly off-the-shelf Aggregator 2 years, 3 full time developers @100,000/year ~$600,000 $10,000-$20,000 setup $3-$7 per million TOTALS One Time Fees $250,000-500,000 Monthly Fees $20,000-50,000 One Time Fee $25,000-78,000 Monthly Fees $2,000-3,000
- 16. BROKERAGE TECHNOLOGY ADD ONS Mobile Access (iPhone, iPad, Android, Tablets) Multi-Account Manager Plugin Real-time News Feeds Market Depth One-Click Trading Price Widget for Website 16
- 17. SYOB DEPLOYMENT STEPS Approximate 8 Week Process 1. Agreement Signed by Client 2. Compliance Documents Completed 3. BT Due Diligence Review 4. Incorporation 5. Brokerage Bank Account Application 6. Brokerage Bank Account Set Up 7.Complete MetaQuotes White Label Request 8. MetaQuotes White Label Processing 9. Platform Settings with Account Management 10. Configuration 11. UAT Deposit 12. UAT Acceptance
- 18. CONTACT US Phone: +1(617)-314-6800 E-mail: sales@bostontechnologies.com www.bostontechnologies.com 鏤Boston Technologies Inc. 280 Summer Street, 9th Floor Boston, MA 02210 Phone鐚+1 617 314 6800 Follow us:
Editor's Notes
- #4: Trading in foreign exchange markets averaged $5.3 trillion per day in April 2013. This is up from $4.0 trillion in April 2010 and $3.3 trillion in April 2007. FX swaps were the most actively traded instruments in April 2013, at $2.2 trillion per day, followed by spot trading at $2.0 trillion.
- #8: Add - corporate bank account option
- #9: Add Back Office under Boston Tech
- #11: NEWLY ADDED
- #15: NEWLY ADDED
- #16: REPLACE WITH SYOB COMPARISON
- #17: Comment on Marketing and Advertising