Interview with Andrey Vedikhin, CEO of Alpari UK and co-founder of the Alpari Group by Francesc Riverola, CEO and Founder of FXstreet.
(Posted on January 28, 2010 at 14:27 in Francesc's Weblog by Francesc)
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The Alpari Group will be offering its proprietary ECN to FX traders in 2011…

1. Why this change in your trading business model? Do you expect to increase your market share in this fast moving and competitive Forex environment?
We have noticed that the expectations of retails clients are changing rapidly. While approximately only five percent trade via ECNs today, we expect this to grow to over 90 percent within the next few years. Currently, not all retail traders can avail themselves of the benefits of ECN trading, due, for example, to the high minimum-trade size requirement. However, ECN trading will become more accessible in the future, as small trades will automatically be aggregated into larger ones. The benefits of ECN trading, including transparency, deep liquidity, market depth and NDD execution, will become available to everybody. Naturally, we will be adapting our business model as we spearhead these fast moving developments.

2. What advantages will your customers get from having an ECN feed in MetaTrader?
They will profit from deeper liquidity, better pricing straight from the banks, ultra-fast Non Dealing Desk execution and no re-quotes. ECN trading is far more transparent for the trader, and they avoid the conflict of interest that existed with the traditional dealer-broker model.

3. How are you going to deal with the typical ECN downsides, such as steep spikes and frequent slippage?
We are already implementing filtering mechanisms to counter problems with bank feeds producing steep spikes. However, frequent slippage does occur, mainly in times of tight liquidity, so our approach to tackling slippage is to significantly increase our liquidity pool through more tier-1 and tier-2 banks as well as from all working client orders.

4. In 2010 MT5 should be available too. Are you planning to switch to MetaTrader 5 or will you offer both MT4 and MT5? What advantages will your customers get who switch to MT5?
We plan to support both MetaTrader 4 and MetaTrader 5. From our perspective, offering the MetaTrader 5 platform will just entail another separate server, as well as a bridge between MetaTrader 5 and our liquidity pool. Adding MetaTrader 5 to our offering in 2010 will give our clients even more choice. From the traders’ standpoint, it is quite different from MetaTrader 4 in that it offers a more powerful programming language, allowing for more complex strategies. Furthermore, MetaTrader 5 is very scalable, and will show the full market depth, providing more transparency.

5. Is the Alpari Group team working to increase and improve the range of on-line trading products and services provided through your trading platforms?
We are constantly striving to improve our products and services. For example, during the first half of 2009, 99.6 percent of Forex and precious metals orders were executed automatically. However, within the next few months, our ground-breaking NDD execution technology will ensure all orders are automated, which will further reduce execution time. In January 2010, we launched the MetaTrader 4 platform on our Pro account, featuring STP, tighter spreads and very competitive commissions. This new offer makes use of our in-house MetaTrader 4 Bridge and is available to everyone, not just institutional traders. In order to better serve our international clients, we are not only planning to open new offices, but are also will working towards offering more trading platforms (MT5, ECN) and products (CFDs).

6. How are the new NFA regulations affecting your business model? Have you seen many customers moving their account to Alpari (UK) or other Alpari branches?
We have recently noticed that a lot of non-US citizens have moved their accounts to the Alpari (UK). However, unlike a few other trading providers, we have not used the legal loophole to bulk-transfer all our US clients to our UK-based company; we consider that to be deeply unethical. Overall, the stricter NFA regulations only affected our business in July 2009, when net deposits decreased slightly. Since August however, net deposits started climbing again and business returned to normal.

7. How do you see regulation changes in the US and Switzerland affecting the retail Forex Industry as a whole?
Companies in the US now face a big disadvantage due to the regulatory amendments and many clients are trying to move to brokers in other regulatory regimes. However, Alpari US is confident that less competition will increase their client base and trading volumes.
In Switzerland, we expect the key players to apply for a banking license and many smaller brokers will move to other offshore countries. This development favors London-based brokers such as Alpari (UK) because more traders will move their accounts to the FSA-regulated brokers, where they are protected by the Financial Services Compensation Scheme; subject to the nature of their claim and status, they receive a high level of funds protection. FSA regulated brokers also offer segregation of funds, whereby client funds are kept completely separate from company funds, safeguarding them in the case of a company going bankrupt.

Also, is in the news that Alpari Group has launched an institutional trading platform, Alpari Direct Pro powered by Currenex.
Other firms in the past have tried to implement Currenex and expand from predominantly retail to a retail/institutional clientèle, often with mixed results:

1. Which features would you highlight of this new platform?
Our new institutional trading platform, Alpari Direct Pro, provides deeper interbank liquidity, full market depth (more transparency), 100% Non Dealing Desk execution, Straight-Through-Processing and complex order types.

2. Who are your most direct competitors in this arena?
In this arena, our most direct UK based competitors would be London Capital Group and GFT.

3. What will the Alpari Group offer the institutional trader that they aren’t currently getting elsewhere?
Apart from our customized Alpari Direct Pro platform, we offer institutional traders with a professional version of MT4 through our in-house STP bridge, and, once MT5 is launched, the MT5 bridge. Both platforms also support many Expert Advisors. These are simple automated trading strategies written for MetaTrader, and are becoming increasing popular. Furthermore, we are offering institutional pricing, NDD execution and faster execution times. All trading will be 100% automated, and we will welcome all traders, including scalpers and winners.

4. How will the Alpari Group set itself apart from other firms currently using Currenex?
Naturally, the essential technology, liquidity and order types are very similar across the board. We are setting ourselves apart from our competitors by incentivising our clients with aggressive marketing promotions such as an competitive commission structure.

5. How difficult will it be for the Alpari Group’s clients to migrate from MetaTrader 4 to Alpari Direct or to Alpari Direct Pro? Will this migration be mandatory or will it be possible to keep using MetaTrader 4 (for example via API or bridge)?
While we expect most of our clients to stay with MT4 or MT5, we will not be forcing anyone to trade with one specific platform or insist they migrate from one to another. Our advanced trading technology is not tied to one specific platform, and the bridge between MetaTrader and our multiple liquidity providers is a good example of how to make the benefits of the best trading technology available to all our clients, no matter what platform they prefer to trade on.
In essence, whether we are dealing with a micro or professional trader, our goal is to make e-Forex trading accessible to everyone.

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