Advisers and Traders in Australia’s Wealth Market Ask: What About Interoperability?

  

In Australia’s evolving wealth management market, brokers serving the active trader and financial adviser segments are looking to modernize their technology solutions with seamless access to market information, data, and analytics.   

However, many brokers are struggling with disparate systems and clutter on the desktop with separate logons. The challenge is that active traders and financial advisers need these applications to connect and share data.   

“There is a lot of discussion around interoperability in systems and best-of-breed providers in the wealth management market in Australia,” comments James Hammond, Vice President of APAC FlexTrade in Sydney.   

A financial adviser may need to open 10 different applications – CRM, market data and client data, as well as separate systems for international holdings, managed funds, another for client onboarding, AML (anti-money laundering) and KYC (know-your-customer), and compliance monitoring, explains Hammond.  

If a client wants to know about their holistic wealth plan, the adviser needs to know how to generate ideas across multi-asset investment vehicles. This entails extracting information and calculating data across multiple applications which can be extremely difficult.  

In addition, brokers want to simplify complex processes such as client onboarding, which often require logging into a separate portal.  

As brokers think about the wealth market, what a wealth adviser needs and what an active trader needs are similar. “They both want access to a diverse set of products and instruments. If I am trading international equities, they want to look at company financials; if I am trading FX, I want macroeconomic data,” explained Hammond.  

 Customizing Content for Active Traders  

A firm that has moved early to address the challenges is FP Markets, a multi-asset forex and CFD broker, regulated in Australia, which rolled out the Mottai Trader platform in January of 2024 to 200 of its active traders for routing listed-equity trades to the Australian Stock Exchange (ASX). Then it collaborated with Mottai on expanding to multiple products and asset classes.  

The multi-product platform is tailored for intraday traders, who conduct research several hours a day and base their decisions on short- and medium-term events.   

In March, FP Markets expanded the multi-product offering to include contracts on FX, gold, silver, oil, and nickel, along with non-exchange stocks and stock indexes that are continuously traded. It’s also integrating access to FX rates via Mottai through its relationships with FX liquidity providers, and Mottai will manage the message traffic back and forth.  

“One of the key pieces of feedback from clients is that they wanted to build out that platform with more fundamental data and more access to news,” said Joe Kelly, Head of Equity CFDs at FP Markets in Sydney.   

Early this year, FlexTrade’s Mottai business introduced Mottai Infini, an interoperability framework for publishing value-added services such as news, research, analytics, and charting through a single-browser interface in a unified workspace.  

Bridging the Gap 

Recognizing the demand for reducing complexity, Mottai developed an alternative way to integrate the components from external partners into the Mottai trader and adviser platforms. 

“The traditional method of interconnecting systems using an API, involves writing code so that the two systems can communicate together. Instead of the systems exchanging data through an API, they are exchanging widgets or components or modules that are already designed to make sure that that the two blocks can interact together,” said Jean-Michel Blanco, General Manager of Mottai.   

Under the Mottai Infini interoperability method, Blanco said, Mottai provides the partner with a bridge in the desktop screen of the user, which knows where the user is clicking on the screen.  

 “Whether the user is an asset manager, dealer or high-net worth investor, the bridge keeps track of it,” explains Blanco. “There is no need to use any API to update the market data since the bridge is redirecting the widget to the server (of our partner), which is then updating the content live in real time.”  

In February, FP Markets began providing access to data and analytics from the London Stock Exchange Group (LSEG) through FlexTrade’s Mottai Infini framework.   

The firm subscribes to nine widgets, representing different levels of data, said Kelly. “With Mottai Infini and third-party data integration, it allows us to display those widgets within the Mottai Trader platform in a very low friction way,” said Kelly.  

 “When traders bring up fundamental data or a news source on a stock in the Australian market, a window opens, and it shows the data and news. But the way the integration works, that third-party data is managed on the data provider’s server and displayed in a seamless way to clients,” said Kelly of FP Markets.  

“That is fairly unique, it’s not generally how integrations are done,” said FP Markets’ Kelly. “It’s not about asking a third-party data vendor to send us all of your data, and we’ll manage it,” he explained.  

“If there is any piece of technology that is not related to the fundamental trading that is useful – such as research, data, and other content, we can go to a specialist and integrate those components,” said Kelly.  

Blanco compared this type of interoperability “to the way that Apple’s mobile phone allows application providers to update their apps as widgets within the iOS operating system.” 

In addition, Blanco said the use of components and blocks means brokers or other partners do not need to rip out and replace legacy systems.  IT teams at global banks can keep their internal expertise and legacy systems but still choose to publish content and widgets from external technology providers.   

For example, a bank can keep what they do best – such as having one component for holdings in their portfolio, another on advice from the bank on the risk of their underlying holdings. It could add a component from an external research provider and publish its own transaction cost analysis.  

In the case of financial advisers, firms can add their onboarding tool, their CRM tools into Mottai, so all these components talk to each other, said Hammond.  

Regulatory Changes   

As the wealth industry evolved in the 2000s, vertically integrated institutional groups with 100 to 200 advisers dominated the market.  As a result of the findings of the 2017-2019 Hayne Royal Commission the market has moved away from the institutional model.  

“Now there is a trend toward self-licensed AFSLs with 10 or fewer advisers which comes with the benefit of greater flexibility in product selection, technology, branding and compliance, which can provide a unique point of difference to clients,” said Craig Semmens, CEO of PhilipCapital in Australia, a provider of market access, data, execution services, clearing and custody services to wealth managers.   

Major regulatory reforms have also driven change in Australia’s wealth market, such as an education requirement for financial advisers and a best-interest requirement to ensure that advice is given in the best interest of the client. As a result, some advisers left the business, compliance regimes grew, and it all resulted in prohibitively expensive advice fees.    

However, following the more recent Quality of Advice Review (QAR), there are efforts “to rewrite” the financial advice laws to make advice more affordable to retirees and baby boomers, and prevent advisers from recommending overly complex products, such as managed super funds, reported the Financial Review.    

On the other hand, “advisers have lost a lot of flexibility in the types of services they could provide clients and in the choice of platforms they’d like to use,” said Semmens.  

Many financial advisers have gone from using one platform to five – trading platforms, client portfolio reporting, managed funds, banking/cash management, and they may have another one for bonds, he continued.  

“What’s missing is an aggregator,” said Semmens, who sees an opportunity for a technology provider to assemble their own core platform with execution and clearing services integrated with the other adviser functionality.  

For example, Semmens is focused on building an adviser platform around Mottai Trader integrated with PhillipCapital’s adviser portal, an external client portfolio management platform, tax engines and the latest technology for onboarding clients. He likes the fact that Mottai is web-based, so the firm doesn’t need to worry about managing IT infrastructure, and it provides PhillipCapital with the ability to connect bespoke applications that advisers want into its framework and have single-sign on capability.  

Planning for the Future  

Planning for the future, brokers are exploring alternative solutions that offer interoperability and can plug in additional components that they don’t necessarily need to own.  

“To grow a business and to create the solutions you need to service your clients holistically, involves six or seven vendors and historically those vendors don’t talk,” said Scott Anderson, chief relationship officer at Openmarkets, a stock brokerage which provides wealth managers and active traders with execution, clearing and settlement services.   

“Single sign-on is an exciting feature for advisers who must log into seven applications every morning. This becomes more appealing as Mottai starts to wrap up more in the same solution and those things work with each other,” said Anderson. For example, Openmarkets  offers SwiftID, a digital onboarding tool, where advisers enter and verify their details, which could be accessed via Mottai.  

As for next steps, FP Markets is considering other ways it can be more efficient with interoperability, such as using a single sign-on to bring its client admin portal within the trading platform. “The client portal is in a secure part of the web site where clients can go to update their profile, download your statements, or make deposits and withdrawals. Instead of forcing clients to sign into another tab of the web site, we can show the portal within a tab inside the same platform,” said Kelly. “As long as this integration is easy and we don’t have to swap data, and we retain sovereignty over our portal and data,” this is a similar concept, he said.