Digital technology has helped to automate the FX industry and yet many vendors still insist on charging their clients on a per million dollars traded basis to license their tech. For a retail brokerage, this means growth can be expensive and uncertain because success is punished with increased technology costs.
There is another way – subscribing to your technology. Here’s our quick take on the three reasons to choose a fixed monthly subscription: price, risk and confidence.
1. Known cost that doesn’t punish success
Charging for technology access on the basis of a ‘per million dollars’ fee might have made sense in the past. Now, though, trading is not only digital, it’s increasingly automated. Brokers require access to sophisticated software stacks that get the job done for a pre-agreed fee, not a pricing system that holds back growth by punishing success when trade volumes increase.
Brokers have a clear choice. Pay more for technology as they grow in an unpredictable manner, or enjoy the financial gains of scaling up through a fixed subscription for their trading software.
2. Better risk management
There is risk in any trade, but the ‘per million dollar’ charging model adds an extra layer of cost exposure. Brokers often actively manage risk by holding the opposite side of client positions, yet traditional vendor pricing fails to recognize this distinction. Instead of being fairly compensated for the risk they take, these brokers face a fee structure that erodes profitability on every trade, whether that’s on their A-book or B-book business.
A subscription model gives brokers the freedom to manage risk on their own terms, without added pressures of rising tech costs. This ensures risk management decisions drive profitability – not vendor pricing structures.
3. Confidence in competitive markets
Margins are tight in the increasingly competitive retail broker industry, where firms are trading high volumes at low margins. That can spell trouble during a high-volume month where margins are particularly tight. Tech costs can rise on the increase in trade, prompting a tough question: can slimmer margins cover the higher ‘tech tax’?
Being able to have one side of the outgoings vs income equation pre-agreed is very reassuring to brokers, and that is why a subscription model makes so much more sense.
And finally… what our customers say
Phillip Nova is a broker based in Singapore, operating in global FX, CFD and commodity markets. It switched to a subscription model with Integral and has reaped the benefits of predictable cost and sophisticated features that can scale with their ambitions.
Grace Chan, Executive Director at Phillip Nova explains.
“The fixed subscription model not only allows more predictability of cost for Phillip Nova but also positions us to scale our business more efficiently.
As our retail trading audience grows, we can handle increasing volumes of Forex pricing requests without the worry of rising costs.
The predictability of this setup allows us to maintain or even improve the quality of services, offering enhanced features without passing fluctuating technology costs onto our clients.
Ultimately, it helps us offer a more cost-effective, and reliable trading experience.”
