Centroid Solutions CEO Talks About Risk Management & Liquidity Management with Fazzaco

​Centroid Solutions is a technology company specializing in risk management, quantitative analytics, connectivity, complex execution strategies and P&L optimization for financial brokers.

Today, Fazzaco is honored to have Mr Cristian Vlasceanu, CEO of Centroid Solutions, to join us for an interview on topics such as risk management and liquidity management solutions.

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Fazzaco: Can you please give us an introduction to Centroid Solutions and the solutions you offer?

Cristian: Centroid Solutions specializes in technology solutions for brokers who are in need of a superior liquidity bridge, order execution management system, risk management and trading platforms hosting. The team is comprised of professionals with a unique skillset and wealth of industry experience, focused on providing the best solutions in the market and with a mindset to always improve.

Centroid Solutions delivers a complete suite of technology solutions and infrastructure that is specifically designed to help brokers optimize their business performance, expand their offerings to multi-asset and facilitate business growth.

Our technology solutions include:

Centroid24 Risk Management System – an all-in-one Business Intelligence Software, based on big-data technology.

Centroid Gateways Aggregation Engine – an institutional-grade connectivity, pricing, execution, and reporting system.

Centroid Connect Hosting Services – dedicated hosting solutions provisioned in the world's leading datacenters, specifically tailored for trading servers of multi-asset brokers.

Fazzaco: Please tell us more about Centroid's risk management system, and how do you differentiate yourself with your competitors?

Cristian: Our risk management system consolidates and analyses vast volumes of data from multiple trading platforms and bridges on real-time basis and provides comprehensive analytical insights for brokers to forecast and make informed decisions. Our solution covers all aspects and broker's needs for risk management and running their dealing operations.

Additionally, some of our competitors are either focusing on risk management information or trade executions only, which suggest us that brokers are unable to obtain the analyzed information in real-time and cannot react to situations immediately. This creates a handicap situation for brokers on multiple business levels:

Firstly, it prevents brokers to maximize their risk-adjusted P&L results, because risks cannot be automatically detected and mitigated in real-time, at the point of trade execution.

Secondly, it causes business inefficiencies and higher overall operating costs for the broker.

Finally, the fundamental requirement for growing trading volumes is to be able to maintain loyal client-base (to have a low turn-over among existing clients). The main reason why clients choose to stay with a broker is the level of transparency and consistency in pricing and execution quality provided by the broker, under any market conditions. But if a broker does not have a technological means to effectively mitigate any internal risk concerns in real-time at the point of trade execution, without making hard compromises on pricing or execution quality or trade settings of its clients, this is the main reason why clients leave or switch brokers.

For Centroid Solutions, we offer a technology suite, helping brokers effectively overcome the above issues by merging together real-time risk management and quantitative analytics, with the ability to construct sophisticated execution rules, which would automatically detect and mitigate risks, on-the-fly, at the point of execution.

Fazzaco: What should brokers consider when choosing fintech providers to help them strengthen their risk management operations?

Cristian: Risk management is a specialized area of expertise that is based on continuous research. It is important to look at a provider that specializes in this field and comes from a practical background in regard to risk management. This is important because risk management technology must produce relevant analytical insights which address real practical needs of the broker's dealing desk.

Also, there are many aspects of risk management that must be accounted for and cannot be evaluated independently in isolation. A proper risk management technology must be an all-in-one solution, covering all areas of risk management concerns, with centralized visibility over the entire business operations and data.

Additionally, the risk management technology must provide maximum level of automation, producing analytical results in real-time, to eliminate manual data crunching and empower the dealing room and executives with proper business intelligence and up-to-date decision-making information.

Moreover, each broker has its own view about risk, so a risk management technology should be flexible to accommodate bespoke customizations easily, to meet unique requirements and preferences of each broker.

Finally, risk management must not be disconnected from the trade execution process. It is becoming increasingly important to have an execution technology that is able to work based on the real-time risk analytical results, in order to address risks automatically, at the point of execution.

Fazzaco: In the context of your aggregation engine, can you explain what different liquidity pools represent and how are brokers using them?

Cristian: Liquidity pools, also known as liquidity models within our system, can be used by brokers to create distinctive, tailored-made liquidity offerings, specifically designed for various groups of customers.

In the current market it is very important for brokers to stand out from the competition, by creating unique liquidity offerings which match the requirements of their customers, across all the various asset classes. The days of one size fits all offerings are long gone and customers have become highly advanced and are actively searching in the market for brokers with the best trading conditions and liquidity offering that can fulfill their requirements. Therefore, having the ability to create unlimited liquidity models from within the aggregation engine, to choose from various sources of liquidity, dedicated or aggregated, and tailor make multiple offerings, is a must nowadays. Brokers taking this approach have a massive edge, which allows them to better serve their customers, expand their customer base efficiently, without making hard compromises on pricing or execution quality for any of their customers.

As an example, the requirements of retail customers and professional traders can vary greatly: from depth of liquidity offering, products required, speed of execution, order execution types, order management, etc. Having the ability to create separate liquidity models, all the above requirements can be configured accordingly, matching the needs of the traders, and offering direct trading channels for their professional customers, routed to institutional liquidity.

Our Centroid Gateways Aggregation Engine can easily accommodate all the settings and configurations necessary regarding liquidity and execution models, and much more.

Fazzaco: From your point of view, what is the best practice a broker can follow to achieve an optimal trading experience for their customers?

Cristian: The best practice to create the optimal trading experience for a global customer base of a multi-asset broker is to have the main trading infrastructure as close as possible to the source of liquidity and make use of a low-latency, highly scalable and with high throughput technology that can handle even the most stringent market volatility conditions, in order to provide accurate and up to date price updates to the trading platforms, as well as handle trade execution without delay, thus minimizing execution times, slippage, and providing the best opportunities for the traders.

Additionally, in order to ensure a smooth, stable experience for all the customers that may be spread around the world, connectivity from these various regions to the trading platform is key; instead of relying on the Internet to handle the connectivity from each customer to the trading platform it is much better to have access / proxy servers located close to the customers, in their geographical location, and then control and optimize the connections from these proxies to the trading environment.

Fazzaco:Thank you for the insights. In closing, what can brokers expect from Centroid Solutions in the future?

Cristian: We are constantly working to improve our solutions, expand the features and functionalities included and bring new concepts to the market that will give our customers an edge. We will continue to do so and work closely with our customers to design systems that meets their requirements not only current but also for the future, as the trading landscape continues to evolve.

Over this last year we have seen tremendous interest from brokers in our solutions and have gone from strength to strength. We aim to maintain the same pace moving forward, to support our growing customer base. To that extent, we are strategically expanding our technology to cater for such needs, effectively evolving to a complete multi-asset fintech solution. We will be announcing some exciting new developments in this regard, towards the end of the year.