Scaling your e-trading businesses
How does a business scale?
These key elements are an excellent starting point:
Client acquisition & growth strategy
Retail product platform
Pricing, trading & risk management
Client service operations
Technical operations
Start by creating a scalable plan for each of these points. Keep in mind whilst building these, that as a business grows, so do the costs associated with it. It’s a good idea to preempt these costs and have an idea of how they’ll rise.
Business growth & client acquisition
When shopping for a new trading platform, retail clients have certain criteria they consider, including:
Cost of execution
Level of trust in the brand
What does the trading platform allow/not allow clients to do in terms of features, and how does this fit with their trading strategies?
Customer service
API access
Reorder this list according to level of importance. This is highly personal to your business, and should be based on your company’s culture and values.
Consider that not all customers are the same; many have different priorities and trading goals and as such, these should be catered for to maximise and retain client numbers.
Assessing your existing client base may be a good starting point to ironing out any pain points that they might have. For example, conducting a simple survey can help pinpoint features that clients find valuable, and areas that could be improved. What do your clients want to see? What might make them leave? How do their answers impact your business growth and scalability?
Pricing, trading & risk management
In order to support your growth strategy and ensure results are achieved, outline how you’ll attract and retain clients with attractive, competitive pricing. Be mindful that as businesses scale, vulnerabilities will be discovered and exploited so it would be prudent to watch for these.
Furthermore, as trade volumes increase, so does your risk. Externalising risk can be difficult for LPs to deal with, causing widened spreads or external trading SLAs.
Many market makers follow a strategy that largely hopes for its traders to lose in the long run. However, this creates enormous risk positions, ultimately putting the trading firm itself at risk. Managing this risk will cut the link between the trader opening and closing that position.
Market timing and a reliable risk exit strategy are of utmost importance when it comes to assuring a cost effective, enduring business.
Customer services plan
The difference between good and great customer service can be astronomical. Great customer service leads to:
Increased client retention
Safeguarded future trade volumes
Better trust in the business (which, in turn, leads to a better reputation in the industry)
Satisfied customers who will provide feedback for growth, recommendations to friends, and reviews
In order to provide top level customer services, consider the following:
Does your team have the tools, expertise, training and capacity to support client enquiries?
How will you organise resources to meet the above requirements, and how will you expand these so customer services remain consistently great as your business grows?
Compose a list of common client issues, and how you’d like your team to resolve them, as a starting point.
Ensure customer enquiries are all logged and periodically assessed to ascertain which issues are most common, and find solutions if possible to fix these before clients reach out to your team.
Discuss business values, culture and client etiquette with your team so that all client-facing employees are aware of the image you’d like to convey. This will also help improve client trust, knowing that there’s a standard being upheld when it comes to customer care.
Technical operations
Consult with your team to outline how growth will affect technical operations. Some topics to take into account are:
Do your vendor fees scale with trade volume? Are they $/m based?
Do you have measures in place to alert when servers are at capacity?
What prices are you using to fill client orders?
