As banks and financial institutions wake up to the growing potential of the online trading market, they continue to look for the technological solutions for gaining reliable, fast access to the sector. However, developing a workable, tried and tested platform for online trading is neither a cheap, straightforward nor timely exercise – and it was from this position that the concept of white labeling originated.
Once viewed as a necessary step, White Label Partnerships have grown to become a sought-after solution that can offer much greater front, middle and back office support systems than many institutions could develop themselves. So what has changed? Why is the White Label Partnership business now proving both popular for those opting to use it, and successful for the companies who can offer the innovation and support already in place?
The answer lies in development. The sector itself has moved beyond its origins. Once businesses have opted to partner with a solution provider, a wholly unique and adaptable platform is on offer. Where once, it was viewed that a WLP watered down a business' ability to differentiate itself from the rest of the market, it is now becoming accepted that they really are able to develop and make the platform and interface, their own.
Why not build your own?
To ‘build' a front-to-end platform is inarguably time-consuming and requires an enormous investment in terms of skill retention, capital and effort from any organisation willing to do it. The reality is that few have succeeded. The IT development and testing phase, on its own, is the work of a highly skilled, multi-faceted and specialist team. While most financial institutions have core IT capabilities, a very small minority have the skill set necessary to develop, beta test and support a multi-product platform, with real-time account and risk management facilities.
Without deep pockets and excessive retainers needed to ‘buy in' the level of skill needed or to train staff, operating a successful facility is only becoming harder. Pragmatists recognise that one cost efficient and viable solution is setting up a WLP with a proven provider, who has a record of accomplishment in online trading.
How does a WLP work?
The Brand: White Label Partners gain the benefit of the platform, branded in their own identity and the platform provider brings the technology and value-added services to the equation. The partner must then undertake to manage the sales, marketing and account management of the business while Saxo Bank works off a revenue sharing model.
The Plan: The business planning required for success in partnering is part of the value-added services and Saxo Bank provides this aspect free of any charge.
The Business: The platform is a company in itself, expanding the partner's product suite, offering a scalable online distribution capability and reaching a dynamic global market of tradable products.
The objectives of the WLP are to provide a platform that allows either institutional clients, such as hedge funds, CTAs, managers and other intermediaries or retail clients to trade any number or combination of assets. It also has the ability to provide a platform for trading of in-house asset managers or external hedge fund managers seeking broader umbrella relationships and gives the WLP brokerage community a powerful tool to meet the market's growing appetite for online FX and other asset-class trading.
The commercial proposition
Saxo Bank provides a turn-key service for select partners including liquidity, execution, information and risk management as well as value-added services for client acquisition, client on-boarding and client management.
Based on a model of outsourced liquidity and risk management, Saxo Bank will consider a revenue sharing agreement with the WLP that takes into account projected and actual volumes. The Partner receives training, advice and in some instances, outsourced support of components of the value chain including lead generation, contract administration and client service/support as needed and determined between the partners.
The Platform
The client station is branded in the Partner's chosen identity, color, logo and personal design specifications. All technical work and design integration is completed by Saxo Bank's WLP IT Group and is designed with specific partner defined workspaces, including: basic FX retail clients, advanced FX institutional clients, multiple-products for global clients emphasising a specific country's securities and with unique, WLP web-feeds, research, communications and daily updates. The WLP needs to provide a point person for the IT set-up, but all development of the platform and the workspace is performed by the Saxo Bank WLP IT group for the WLP's approval.
Developing the client base
As part of an end-to-end service, Partners will receive mechanisms specifically designed to help generate leads, via the Internet and help establish the capabilities for branded advertising, web hosting and external creative services and project management. Training is another aspect provided by Saxo Bank. The Sales Team are given specifically developed training and assistance where required, and Saxo Bank provides them with background to answer trading questions, to manage account issues and to service clients in an ongoing and supportive manner.
Support at both ends
For a WLP to indeed prove successful, both parties need to be equally as committed to providing back up, service and to meeting their side of the agreement. Saxo Bank does not just enter into any partnership. A workable solution requires marketing commitment and the sales drive from the Partner's end. In turn, Saxo Bank provides a turn-key approach that caters to the full value chain of services, including sales, legal and finance, sales trading, dealing and market making, customer service and back office.
What product are they partnering?
The SaxoTrader is an award-winning, multi-product thick-client platform offering Forex, Stocks, CFDs, Futures, Funds, real-time streaming data, trade execution, confirmations and margin management. Clients have access to streaming news, research and data, with world-class liquidity and access to exchanges worldwide, while ongoing maintenance and technology enhancements complete the package.
The FX product range includes over 150 Forex crosses, Spot Gold and Silver, Options, forward outrights, trailing stops, stop loss orders and aggregated liquidity. The equity product range includes Contracts for Difference (CFDs) from 23 exchanges, 15 Index-tracking CFDs for major indices. It also offers Stock trading from 22 exchanges and Stocks can be used as a collateral for margin trading other products.
The Futures offering includes direct online trading on 480+ online contracts, Gold and Silver, financial Futures, crude oil and natural gas energies and Stock Indices. Clients can also use traditional offline trading of a wide range of commodity futures (50+), with 16 Exchanges available and new online commodities trading.
The information suite is full-scale and designed to offer clients the benefit of a number of integrated sources. It includes streaming news from: Dow Jones Newswires, Market News International and AFX, along with real-time risk management and cross product account information as well as dealer chat and market comments and recommendations, aided by technical analysis.
Ongoing technological enhancements
Saxo Bank places technological innovation among its top priorities, with a track-record to match. Partners can expect the expansion of tradable instruments, the ongoing development of new functionalities for professional trading execution and the implementation of business management and risk management protocols for front and back office capabilities.
Client reporting and risk management
All client account information including risk management metrics such as available margin, collateral use and net free equity are calculated, displayed and reported to clients in real-time on the trading platform. Client users will, at all times be able to see trades executed, trades booked, rollover history, account and financial statements, real-time audit log of all client account events, pre-deal margin check, real-time margin control, real-time, mark-to-market profit & loss and multiple accounts or/and base currency accounts.
