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Enhancing risk management tools

New service aims to improve risk management for brokers while offering a more “intelligent hedging” strategy

New service aims to improve risk management for brokers while offering a more “intelligent hedging” strategy

A new solution for brokers looking to manage risk has been announced by a leading London based forex technology provider. X Financial Solutions has unveiled xRisk, its new automated service that manages a brokers risk exposure, allowing “intelligent hedging” strategies.

The need for better risk management solutions for forex brokers has become stark, with the rise in the number of high-frequency traders and scalpers giving the market a particularly high-risk reputation.

xRisk aims to take much of the risk out of forex trading by automatically hedging trades within parameters set by the broker. The service will be tied into X Financial’s X Open Hub platform, a cloud-based trading environment with an open API structure which is used by many banks and brokerage firms across the world.

This allows brokers to decide how much exposure a client will face, saving on the alternative system of straight-through processing (STP). The STP model used by many hedges all trades, taking away much of the control brokers have over the level of exposure they want. The aim of the product is to provide protection against scalpers and high-frequency traders. The issue of high-frequency traders has been discussed at great length by regulators and service providers, who feel it gives an unfair advantage to institutions over individual traders.

The product will also help to manage clients that trade in large volumes in a more efficient manner, while also only hedging specific trades when necessary, rather than all trades. This will help brokers get improve their profitability.

Announcing the launch of the software, X Financial’s managing director, Jakub Zablocki said: “Our new xRisk system lets brokers manage risk the intelligent way, without giving up extra profits from their B-Book. We designed this system using the open infrastructure of X Open Hub. Its purpose is to empower our broker partners when it comes to their risk management methods.

“xRisk will automatically hedge only the excess exposure set by client or instrument, while maintaining excellent client execution quality with smooth Non-Dealing Desk execution. By hedging only what is necessary we see this as a revolutionary new way for our broker partners to manage their risks and maximize their profit stream.”

The company has been expanding its product offering at a rapid rate in recent months. In July it launched a collaborative service with global technology firm Tradency, which would integrate X Open Hub’s back office solution with Tradency’s Mirror Trader platform. X Financial also announced in April it was partnering with leading liquidity provider FXCM to offer an “end-to-end brokerage solution.”

 

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