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MB Trading Futures - Introduction

  • #3,701
  • Jul 1, 2009 3:58am Jul 1, 2009 3:58am
Quoting jleblang

So, with my 1000th post, I’d like to say that the FIFO situation is being worked on both with MetaQuotes and internally with our system that handles the translation between Meta and the ECN, and we feel comfortable (sound familiar) that we will be able to deliver a working product that meets the FIFO requirement while still allowing EAs to work.
Congratulations on your 1000th post, not an easy feat!! How are you going to mark the occasion, commission-free trading for every thread participant maybe?

Re FIFO and MT4, don't you think they've been extremely slow to react? As I understand, this new rule has been on the table for over a year but in that time they haven't thought up a contingency plan in case it was implemented?!?

You might not want to say but were you part of NFA consultation process? Again you might not want to say but if you were what was your response?
  • #3,702
  • Jul 1, 2009 6:11am Jul 1, 2009 6:11am
Quoting jleblang
For my 1000th post on these boards, I’d like to thank everyone for over two and a half years of great discussions.
Justin, thanks A LOT for the great job you are doing, both for MBT in general and the traders at this forum too! Well done!
One Chart is Worth Ten Thousand Words.
  • #3,703
  • Jul 1, 2009 6:51am Jul 1, 2009 6:51am
Your service looks excellent and have won awards from Barron's which really impresses me. I'll probably be signing up soon, however I just was wondering if you will compete with the commissions offered by Interactive Brokers as they are significantly cheaper.

Thanks.
  • #3,704
  • Jul 1, 2009 8:06am Jul 1, 2009 8:06am
There are Minilots available on Currinex (ECN) with accounts opened for under 5000 dollars
.....Minilots on FXCM active trader ECN (only need generate 10mil a month to qualify)
..... a rumored updated ECN coming out soon with Nord markets .........

When there are more and more options to trade ECN with commish FAR FAR lower than MB are you guys planning to bring your commish down to a competitive level ?
  • #3,705
  • Jul 1, 2009 8:09am Jul 1, 2009 8:09am
Hi,

I was just going through the legal stuff needed for MBT'S signup process and stumbled over the clause 13 (cross trading consent) in the foreign currency customer agreement. Well I'm not that much into all the legal stuff, but correct me if I'm wrong, in my opinion this can be interpreted as some loophole to establish a Dealing Desk if wanted - or am I on the wrong track at all? Well, would like to hear some opinion from other users/clients of MBT and how they think about it.

Cheers.
  • #3,706
  • Jul 1, 2009 8:23am Jul 1, 2009 8:23am
Justin

Who are 3DFOREX, or is that an awkward question?
  • #3,707
  • Jul 1, 2009 10:52am Jul 1, 2009 10:52am
Quoting Trader KGB
Justin,

Do you know why the displayed number of liquidity providers changes so often from day to day?...
TraderKGB-

I actually was not ignoring your posts, I just wanted to see exactly what I was allowed to say in answer to that question. Here are a few notes, although certainly I can’t give away some of the deeper secrets that make the ECN what it is:

 

  1. When a platform has just one or two liquidity providers, those providers are typically required by the platform to show liquidity at all times (otherwise, the platform wouldn’t have quotes). We place no such obligations on our providers in general, so if their trading changes at any given time, they come and go. This doesn’t really cause a problem in terms of our average spreads because of the sheer number of providers that we have.
  2. Also, they can show a quote and actually have much MORE behind the size displayed, but they can’t obviously take less than the size displayed.
  3. We are often adding new routing for various vendors, and I can’t really comment on that piece more, but it does impact what you are saying.

Unfortunately, that’s about all I am allowed to contribute to this item. Hope it helps.

  • #3,708
  • Jul 1, 2009 11:27am Jul 1, 2009 11:27am
Quoting pipmutt
IndyTrader

Seeing as Justin doesn't mind us discussing it here......

What he said was:

"Fixed spread means that the broker is making money against your trades.
If you are making money, then at some point they will slip you and mess with you until you aren’t.
A spread-broker gets paid when you lose."

While that's true of some brokers it's a gross generalization and not true of every broker, that's what I was taking exception to, there are in fact some excellent marketmakers out there which offer a fair deal.

Brokers like...
Pipmutt,

Thanks for the comments, but I have to agree with Indy that I never said all spread brokers behaved in a 100% devious manner.

One correction. You stated that we charge a commission and then also “probably get a regate on spread from their liquidity provider(s).” This is not correct, and let me explain. If I was a desk that hooked up with one (maybe two) liquidity providers, they would be required to always show enough liquidity that the quotes didn’t go too wide and they would be required to give a certain level of execution to my customers. Beyond those parameters, they would do what they wanted, and I might get paid a rebate for the relationship and using them as sole provider. Keep in mind that this system would guarantee that they see both sides of my customer trades.

Our system is an ECN model. We ask a bunch of liquidity providers to display their quotes into our system. We don’t guarantee that they will get the volume both ways. As a customer, although you’ll never know, you might buy from XYZ bank and later sell back to ABC bank, so they can’t bank on that coming back their way. They have to compete with best pricing on our system to see our volume because we route to best pricing. However, we are the liquidity TAKER in this relationship. We have to pay them, not get a rebate from them. Thus, the commissions. And for people that suggest that our commissions are slightly higher than some of the other “ECNs,” I would suggest that it is the nature of our model that gives far more liquidity and tighter pricing because we don’t just let one or two banks handle it all and make the spread all day. We could just work with one or two banks and they would therefore sell more of the order-flow both ways and therefore they could be more likely to make the spread, and thus our costs would be lower. If you go far enough on that spectrum, then you get to the point that they could pay us back. We choose to stay in the one direction, which is to get as many in the system and pay them to be there, and this makes them compete to see any of our customer order flow.

It’s a very different model than the desks, than the “1-bank straight-thrus,” and than some of the Currenex-flavored “ECNs.” When you say “horses for courses,” that is true. People need to decide. But I feel very comfortable saying that our model is rigged far to one side of that spectrum, meaning we just want to provide the most active traders with the most liquidity.
  • #3,709
  • Jul 1, 2009 11:49am Jul 1, 2009 11:49am
Quoting pipmutt
Congratulations on your 1000th post, not an easy feat!! How are you going to mark the occasion, commission-free trading for every thread participant maybe?

Re FIFO and MT4, don't you think they've been extremely slow to react? As I understand, this new rule has been on the table for over a year but in that time they haven't thought up a contingency plan in case it was implemented?!?

You might not want to say but were you part of NFA consultation process? Again you might not want to say but if you were what was your response?
We did comment on the process to the NFA, as we always do. I can’t speak to Meta and why they were slow to react. Perhaps they thought MT5 would be out in time.
  • #3,710
  • Jul 1, 2009 11:49am Jul 1, 2009 11:49am
Quoting tc888
Your service looks excellent and have won awards from Barron's which really impresses me. I'll probably be signing up soon, however I just was wondering if you will compete with the commissions offered by Interactive Brokers as they are significantly cheaper.

Thanks.
tc888,

Our commissions are based on the cost structure of our model. It you scroll up a couple of posts to one of my replies to pipmutt, you’ll see a response to your question.
  • #3,711
  • Jul 1, 2009 11:51am Jul 1, 2009 11:51am
Quoting rokoko
Hi,

I was just going through the legal stuff needed for MBT'S signup process and stumbled over the clause 13 (cross trading consent) in the foreign currency customer agreement. Well I'm not that much into all the legal stuff, but correct me if I'm wrong, in my opinion this can be interpreted as some loophole to establish a Dealing Desk if wanted - or am I on the wrong track at all? Well, would like to hear some opinion from other users/clients of MBT and how they think about it.

Cheers.
Rokoko,

This has been discussed many times on this thread. When you open an account with us, you don’t have a clearing agreement with the banks in our system. You only have an account with us. We have the clearing agreements. Therefore, while you use our software to hit those banks, and those prices are always honored at settlement, you need us as the intermediary. We take your trade and the funds and transfer to them at 5 pm EST based on our agreements with them. This language cannot change unless every one of our customers had their own clearing agreement with all of the banks in our system.

It does not open the door for dealing desk.
  • #3,712
  • Jul 1, 2009 11:51am Jul 1, 2009 11:51am
Quoting pipmutt
Justin

Who are 3DFOREX, or is that an awkward question?
Why would that be an awkward question? That is the ECN that handles all of the orders that are routed from MB Trading.
  • #3,713
  • Jul 1, 2009 12:33pm Jul 1, 2009 12:33pm
Quoting jleblang
For my 1000th post on these boards, I’d like to thank everyone for over two and a half years of great discussions. This thread started on November 8, 2006, as an EFX thread before MB Trading acquired EFX. I’m pleased to see that it remains on the top of the list of threads to this day and is the single most viewed thread in the Broker Discussion section of Forex Factory. We are very pleased that so many of you have embraced our strategy of transparency, liquidity, and direct access over the last several years, starting back at a time when most people...
Justin-

Congrats on the milestone and for being a beacon of light in this noisy world.
FXChant Singing the World of Forex
  • #3,714
  • Jul 1, 2009 12:43pm Jul 1, 2009 12:43pm
Quoting jleblang

Thanks for the comments, but I have to agree with Indy that I never said all spread brokers behaved in a 100% devious manner.
Ok, that's what I had a problem with, it sounded like you were saying all brokers.


Quoting jleblang
We could just work with one or two banks and they would therefore sell more of the order-flow both ways and therefore they could be more likely to make the spread, and thus our costs would be lower. If you go far enough on that spectrum, then you get to the point that they could pay us back.
I just assumed that if you're putting through significant volume then the liquidity provider(s) might offer you something back as an incentive. I guess if you're using multiple providers then it spreads volume among them. Doesn't that affect the competitiveness of pricing though, wouldn't you get a better deal for yourselves and clients if you used just one or two? I mean how competitive can pricing be, wouldn't liquidity quickly disappear from the most competitive if their quote was significantly different.


Quoting jleblang
That is the ECN that handles all of the orders that are routed from MB Trading.
So orders go from trader to MBT as counterparty, then to 3DForex as ECN, and then to a liquidity provider?


I'm not trying to heckle you here or trip you up, I'm genuinely interested in the way it works and it's not often we get a chance to chat directly with a broker other than with helpdesk staff.
  • #3,715
  • Jul 1, 2009 1:07pm Jul 1, 2009 1:07pm
Quoting jleblang
Rokoko,...
Thanks for clarification. Sorry, for repeating the question - my search did not give me any results on this in the forum.
  • #3,716
  • Jul 1, 2009 1:59pm Jul 1, 2009 1:59pm
Quoting pipmutt
Ok, that's what I had a problem with, it sounded like you were saying all brokers.



I just assumed that if you're putting through significant volume then the liquidity provider(s) might offer you something back as an incentive. I guess if you're using multiple providers then it spreads volume among them. Doesn't that affect the competitiveness of pricing though, wouldn't you get a better deal for yourselves and clients if you used just one or two? I mean how competitive can pricing be, wouldn't liquidity quickly disappear from the...
Pipmutt,

No problem on the first point. All clear now.

Regarding your second point…as I said, yes, our model could be to only work with a couple of banks and then they probably would rebate us a piece of the spread because they would see all of the volume. And if we did that, ahem, we could be, you know, an “ECN broker” charging something like $2 per $100,000. How competitive can pricing be? We have an awful lot of institutional customers who seem to think that we are the more competitive solution for executing size. Granted, the bigger traders aren’t paying a $5 rate because we have discounts based on volume (starting over $250 mil monthly). But in terms of the liquidity on our system, think of it from this perspective. We pay providers a little more to be here (and don’t expect them to pay us instead). We have a lot of them. That means that if they want to be selling the EURUSD, when our customers buy from them, they have a lower cost (because they don’t have to pay us and in fact get paid by us) than if they go through a broker on a fixed spread system that they have to pay a pip to for the business. It’s the old ECN “take or give” equation from the stock world. Do you want to be the guy taking the liquidity and paying for it, but therefore having a lot of people trying to give it to you or vice versa. We choose the first side of the equation because we know that it does create a lot of competition that gets those spreads as small as they are and puts a lot of liquidity in there. To put it simply, we do believe that our model is better for large and small active traders. It is completely possible that we aren’t the best solution for someone that wants to buy the USDJPY and hold for a week for the swap rate because they don’t care about cost savings on their entries by a pip, but they do care about the swaps, and as everyone notes on these boards, in many cases, our swaps are not the best. We set out to be a very specific thing, and we feel like our customer growth rate shows that the market likes our model.

Regarding your third point, yes, from an infrastructure standpoint, that’s how it works. We are the broker and the counterparty to 3DForex. They have the specific agreements in place with the liquidity providers, and then they have technology to route and connect orders coming in equally from all parties (banks, liquidity providers, etc.) They are also free to work directly with other brokers who want to use them as a liquidity hub. We have the technology of order types to handle your orders as effectively as possible and then when necessary, send out to 3DForex.

I don’t view that as heckling. It’s been discussed on these boards in the past. I don’t regularly make the distinction because it is really a corporate/infrastructure distinction and it tends to confuse something that doesn’t need to be. For example, in the stock world, we route orders to exchanges and ECNs. ISLD and ARCA were two ECNs that we might route your order to. In forex, if we routed to multiple ECNs, then it would be more necessary to separate the two. But in this case, we route all of our forex stuff to 3DForex. So when I say that you place an order and it is routed to the best possible price on the ECN at the time hitting from any of the liquidity providers in the system and we are the counter party because customers don’t have clearing agreements with the banks, we do…that is all accurate. There’s an extra step in there that doesn’t have any bearing on execution, but you’re welcome to discuss it and I will always answer.
  • #3,717
  • Jul 1, 2009 2:11pm Jul 1, 2009 2:11pm
Quoting jleblang
For my 1000th post on these boards, I’d like to thank everyone for over two and a half years of great discussions. This thread started on November 8, 2006, as an EFX thread before MB Trading acquired EFX. I’m pleased to see that it remains on the top of the list of threads to this day and is the single most viewed thread in the Broker Discussion section of Forex Factory. We are very pleased that so many of you have embraced our strategy of transparency, liquidity, and direct access over the last several years, starting back at a time when most people...
Congrats Justin! Thanks for all of your thoughts and comments over the years. It really helped me figure out where I needed to be.
  • #3,718
  • Jul 1, 2009 2:42pm Jul 1, 2009 2:42pm
Quoting jleblang

  1. We are often adding new routing for various vendors, and I can’t really comment on that piece more, but it does impact what you are saying.

Justin,

Thanks for getting back to me, that does clear up a few things. I guess the one question I have is whether MBT/TDFX is limiting the number of displayed vendors (for bandwidth or other reasons). I know of other shops that do this. Regardless of how many providers they're working with, they only show the top 4 at any given time. Is MBT/TDFX doing something similar? (i.e. if you have 8 providers currently quoting EUR/USD, would you only show the top 3 or 4 to reduce bandwidth, etc or is everything shown)?


My other inquiry was about making the historical feed available by TCP/IP, and not just ActiveX (as it is currently). This would allow for backfills when using other front-ends such as QuoteTracker or NinjaTrader. I found a temporary workaround using non-MBT data, but would much prefer to be using the data I'm trading off of. Any chance we could see this happen? thanks!
  • #3,719
  • Jul 1, 2009 4:32pm Jul 1, 2009 4:32pm
Quoting jleblang
Pipmutt,

No problem on the first point. All clear now.

Regarding your second point…as I said, yes, our model could be to only work with a couple of banks and then they probably would rebate us a piece of the spread because they would see all of the volume. And if we did that, ahem, we could be, you know, an “ECN broker” charging something like $2 per $100,000. How competitive can pricing be? We have an awful lot of institutional customers who seem to think that we are the more competitive solution for executing size. Granted,...
i don't think mb trading does anything, from the look of things 3dforex does everything, mb trading is just using there platform.
  • #3,720
  • Jul 1, 2009 7:20pm Jul 1, 2009 7:20pm
Quoting jleblang

We have the technology of order types to handle your orders as effectively as possible and then when necessary, send out to 3DForex.

There’s an extra step in there that doesn’t have any bearing on execution, but you’re welcome to discuss it and I will always answer.
Hi Justin,

I have a couple of questions regarding your last post, and another question on a separate topic.

What is the extra step involved in order execution that you mentioned?

And, can you give an example of when it wouldn't be necessary to route an order to 3DForex?

Also, how is the NFA FIFO rule going to affect the order placement structure on the MT4 platform at MB Trading?

I've been reading that the new rule not only affects straddled orders, but also limit and stop loss orders with other US based brokers.

Is this true?

Thanks for your help.
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