For some brokers, regulatory requirements require them to have their Trading Platform server hosted within the country. However, when it comes to liquidity, many brokers are using liquidity providers from different parts of the world where optimal offerings are available, i.e. sourcing liquidity from London LD4. This geographical separation introduces a major challenge: price feed and trading latency, which can negatively impact brokers.

Understanding the Latency Issue

When a broker’s Trading Platform is not hosted close to their liquidity provider (LP), there is a high chance that slippage or data packet loss will occur, as it takes time for prices or orders to travel to and from the LP’s pricing engine to the trading platform via Internet, and Internet is not something we can control.

When data travels via the Internet, it goes through different access points and the bandwidth is being shared with other parties who are using the Internet. Hence the connection can sometimes be slower and in the worst case scenario, packet loss may happen.

In FX and CFDs trading, even milliseconds matter, and any delay can result in slippage or missed trading opportunities. Hence the optimal setup is to have the LP, Connectivity Bridge, and the Trading Platform hosted in close proximity to each other, such that the distance and latency is kept to a minimum.

As a case study, we shall look at what caused an Indonesian broker to put in place a leased line to streamline their service to their customers and what improvements it brings to their business.

The Impact: Downtime, Client and Revenue loss, and Reputational Damage

As mentioned at the beginning of this case study, brokers who are operating in Indonesia, the regulations require them to host their trading platform server, on authorised vendors, in their respective country. However, as the trading counterparties with the most competitive offering have their engines in London LD4, the brokers are faced with the disadvantage of being far away, and consequently face potential latency-related problems.

One such broker experienced severe connectivity challenges, including frequent disconnections, which prevented their clients from trading effectively. These issues also caused delayed order executions, further compounding the problem.

As a result:

• Several clients incurred financial losses due to failed trades.
• Complaints and refund requests surged, adding strain to the broker’s operations.
• The broker’s financial performance suffered, accompanied by reputational damage and a decline in client trust.

The Solution: Centroid Hosting with a Leased Line

To address these challenges, Centroid Solutions proposed a robust leased line solution. By establishing the leased line connectivity between Centroid’s London LD4 Bridge Infrastructure and the location within Indonesia, where the broker’s trading platform is, this ensures the broker’s trading infrastructure and trading platform are seamlessly interconnected.

To support this solution:

• Traffic patterns, including average bandwidth usage and peak activity, were thoroughly analyzed. Adequate reserved bandwidth was provisioned to handle current traffic under varying market conditions, with scalability for future growth.
• Redundancy was incorporated into the end-to-end solution to ensure reliability and minimize the risk of disruptions.
• Continuous performance monitoring was established to track latency and bandwidth usage. This ensures that the leased line remains optimally provisioned. Bandwidth allocation can be adjusted as needed to accommodate increased activity and prevent bottlenecks.

This solution provided the broker with a stable and efficient trading environment, addressing their connectivity challenges and supporting their long-term growth.

The Results: Seamless Trading Experience

After implementing Centroid’s hosting solution’s leased line solutions, the broker saw immediate improvements:

• Drastic Reduction in Latency: Near-instant trade execution, enabling a smoother trading experience for clients.
• Elimination of Packet Loss: Reliable transmission of price updates and trade orders, ensuring accuracy and consistency.
• Enhanced Client Satisfaction: Improved trading performance led to greater client satisfaction, retention, and trust.
• Consistent and Predictable Connectivity: A stable and predefined connectivity experience ensured uninterrupted trading operations.

This case highlights the importance of optimized hosting and connectivity for brokers operating in regulated markets while sourcing liquidity from international providers. With Centroid Hosting, brokers can achieve superior execution performance, reduced latency, and a seamless trading environment for their clients.

Conclusion

For brokers operating across different parts of the world and facing similar connectivity challenges, Centroid Hosting Solutions provides tailored solutions that bridge geographical gaps, enhance execution efficiency, and ensure compliance with local regulations. With a robust hosting infrastructure and dedicated leased line solutions, Centroid empowers brokers to remain competitive in the global market without compromising on performance or reliability.

If your brokerage is facing similar connectivity challenges, contact Centroid Solutions today to learn more about our tailored hosting services.