Thanks to all who helped me in my previous thread about MB Trading. After a year of education and practice with FX, I will be opening a live account in about a month. But a link on FXStreet brought me to a new broker, MahiFX, which will be launching in February. Very entertaining link mocking John Paulson lol. So I did some due diligence and found a good interview article from a link on their Facebook:
One thing that puzzles me, though:
(from above article:)
Fast execution also results from the fact that MahiFX will be a market maker, rather than a broker, meaning that they will absorb the risk directly into their portfolio rather than passing it on to another party. “Through 100% automation and by being a market maker we effectively cut out that level,” Cooney said. “Also, by being a market maker, we can avoid the need for any mark up on spreads.”
Now from what I understand from seasoned Forex traders I have read on these forums, as well as others, the consensus is that Market Makers = Bucket Shops. All of the veterans say to stay away from MMs in favor of ECN brokers and preferably of the STP variety. This new firm sounds like they have everything a trader could hope for! Low spreads, no commissions (ala Oanda I guess), supposedly a great platform, and supposedly transparent and instant (limited slip) transactions. What’s not to love, right?
My question is, could this be a new breed of Market Maker, or does it sound like BS (Bucket Shop) that will just trade against me and rip me off? Have any of you more experienced traders seen this type of operation before? I just want to know if it is something worth waiting for. As always, thanks in advance!
I am part of the MahiFX team and would like to respond to some of your comments and hope they address your questions.
With respect to your concerns regarding market-makers: A market maker has no advance warning of a trade. When a rate is clicked on to execute the trade, there is no information for anyone to exploit or trade against, even if they misguidedly wished to. And it is misguided because there is no way you can build a sustainable business by treating your customers in such an unethical manner. However there is information in order books, something that is true for both market makers and brokers and could potentially be manipulated by either. So the question should be how secure is your order information? At MahiFX our pricing engine has no knowledge of the order book. We think it is a matter of principle that pricing should not know about or anticipate orders. Orders get executed on a neutral, fair price stream. In other words, the platform is a dispassionate neutral machine that has no insight or opinion on where the markets are going. There is no human intervention or dealing desk.
So while MahiFX cannot comment on other market makers, we can categorically assert and assure you that in the case of MahiFX: market-maker does not equate with “bucket shop”.
The team at MahiFX have a solid background of many years in institutional FX and were part of the team responsible for building an award-winning trading platform for a well known UK investment bank. We wish to provide our customers with a consistent, reliable and highly competitive trading experience.
As you may have seen, MahiFX launches in Feb 2012. You can pre-register to be notified as soon as we launch, which I hope you will - so you can demo the platform.
