Boutique prime brokers court active private clients and traders

The introduction of CFDs to private investors and traders just over twenty years ago kickstarted a revolution in the financial markets that continues to this day. Democratising access to markets and products and opening up customer choice, but these ongoing changes are also blurring the boundaries between active retail and professional traders and smaller institutions.

That, in turn, has created opportunities for boutique prime brokers indeed one of the originators of retail CFDs IG Group has been actively marketing and advertising its services in this area during 2020.

Individual traders can outgrow their broker whether that’s because the size of an account and associated counterparty risk, or the frequency of their trading is no longer a fit for that particular counterparty,  or because the client requires services and market access that a typical MT4/5 reseller cant facilitate.

Linear Investment is a good example of how a boutique prime broker might bridge that gap.

Linear Investments chaired by Jerry Lees was formed by former bankers from Credit Agricole and Citigroup and has grown rapidly over the last decade and now offers a full range of prime brokerage services across FX equities, ETFs, future and options and CFDs. Its target market has been smaller hedge funds and proprietary trading firms but also to a new group of individual day and high-frequency traders.

Algorithmic trading and coding have become part of many traders toolboxes and they want to find brokers and counterparties who can facilitate their algo strategies, which often need low latency connectivity, direct market access and sophisticated order types, the sort of services that are supported FIX connectivity which Linear offer.

This is a standard communications and connectivity protocol among investment banks and institutional brokerages, but it’s not often made available to individual traders.

Linear Investments also offers connectivity via a host of other protocols and platforms including Refinitv REDI and FIS Sungard.

Linear Investments has access to 25 US exchanges and dark pools and promises no internalisation of trading flows real-time risk management and margining tools, as well as surveillance and compliance services. Alongside a 24/6 trading desk.

Most individual traders won’t ever need such a sophisticated solution as the ones offered by Linear, nor are they likely to trade the volumes required to make it economically beneficial to both parties.  But for the growing minority of highly active individual traders, it could be worth exploring your options if you are outgrowing your existing provider.

Linear isn’t alone in offering these type of services but unlike competitors such as IG Group and CMC Markets Linear is dedicated prime brokerage business.

In my experience, it rarely hurts to explore your options if only to find out that the grass isn’t always greener on the other side of the fence, or to establish the volumes, practicalities and costings necessary to make a switch, after all for traders, being forewarned is being forearmed.

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