Why pricing is more than just a feed

Pricing is a complex machine, with many elements that must be balanced and maintained to avoid unnecessary losses while attracting new customers and increasing flow. Here, we take a look at the considerations that should be made, using client examples to demonstrate just how important seemingly minor changes to your operations can be. 

Tight Spreads

We recently onboarded a client who would lose millions of dollars in deposits when the XAU spreads blew out. Tight rates attract retail customers, so they needed to ensure this was consistently the case to prevent these losses. By showing tight rates and then charging commission, they attracted more flow and increased their volumes by 78%.

Accurate, Reliable Rates

Pricing is not just about tight spreads; they also need to be accurate and reliable. Without accuracy, businesses can fall victim to inefficient hedging and filling clients the wrong side of the mid. Without reliability, you can’t optimally hedge or make a decision on whether a rate is good to hedge on. Our software utilises predictive price signals with our price formation and distribution. This enables you to tailor the rate and qualify liquidity in aggregated environments, keeping your pricing accurate and safe from volatility. When your rate is predictive and reliable, you can avoid harmful moves and attract good business.

Protecting against vulnerability

When your business has vulnerabilities, negative behaviour will always find a way in, and pricing vulnerabilities are particularly dangerous. Opening your business to latency arbitrage and naively aggregating feeds means you’re only as fast as the slowest LP, whilst price spikes and drops can also lead to crossed rates.

Liquidity control

Controlling the liquidity available at each level of the price stack allows control over filling clients at the fair rate when using adverse trading behaviours, for example, machine-gunning /coordinated trading. Using signals in pricing, as our technology does, improves the predictiveness, timeliness and defensiveness of the rate. This means clients are getting more sophisticated in trading, using algorithms and signals, and you’ll always stay one step ahead.

Taking full control of your pricing will open up a range of benefits, including increased accuracy, the agility required to get out of the way of harmful moves, reduced vulnerability to unwanted trading tactics, and more attractive rates for prospective clients. We can help you achieve this quickly and easily with our range of technology designed to suit all e-trading businesses, no matter the size.