6 reasons why Electronic Trading is here to stay Henry Johnston hjohnston@arlingclose.com

Although electronic trading has been around for many years it has grown in popularity during a year that has been gripped by a pandemic which has forced us inside. Now most of us work from our kitchen table/sofa/bedroom. We have swapped suits for tracksuits and our morning commute for our morning walk to the kettle. 

The powers of technology have certainly eased the transition from office life to working from home. Video calls and online messaging have allowed firms to stay in touch and this change has even led to companies reassessing their need for office space. Another important use of technology has involved online trading. With people having to juggle children or pets while working from home on top of their busy work schedules, online trading has offered a quick and easy solution in order to carry out daily trading activities. From the click of a button one can easily invest, borrow or simply browse the market from wherever you are.  iDealTrade which is an automated, matching platform for local authority deposits and loans, designed and developed by Arlingclose Ltd, is a good example of this.

Here are 6 reasons why electronic trading (and iDealTrade) is here to stay: 

1) Transparency  

As mentioned briefly above, sometimes it is appropriate to assess the market and see what is on offer. Online trading offers the chance to view the market and not only assess what terms are being offered but seeing what is out there in the market can help formulate your own decisions. This method is extremely transparent and can make it much easier to see the market ‘live’. It allows the dealer to keep an eye on each and every order, as well as any of their own orders placed into the market. It is also important that platforms are transparent and fair on fees too. 

2) Security

One of the most important factors of any online trading platform is security. Online trading platforms regularly encounter problems with email interceptions. Online platforms can be targeted by hackers who are able to intercept a user’s sign-up request and then create their own account using that particular email address. Similarly, they can try to duplicate any emails sent to or from the platform so that they can try to redirect any outgoing funds to their own personal account. iDealTrade is fully encrypted, password protected, certified and accredited and subject to routine penetration testing. Users are all vetted and approved prior to access being granted. No trade or settlement instructions are passed outside of the platform, activity take places by logging in securely, within the confines of iDealTrade’s firewalls. Standard Settlement Instructions are subject to a rigorous authorisation process and must be dual authorised before they can be approved on the platform. These processes allow iDealTrade to remain completely secure and stops any false users from having access to the platform. 

3) Cost

Online platforms are usually cheaper when compared to traditional broker services due to lower running costsiDealTrade is free for investors and the fee for borrowers is currently just3 basis points (0.03%)There are no hidden costs within the platform and no membership or user costs. 

4) Audit Trail

An audit trail is important and can easily be forgotten when trading. When auditors request proof of deals it can become a scramble to find the right information. iDealTrade has standardised loan documentation that is emailed to both sides of the deal after that deal has been matched and completed. Users can log into their own account and download, in pdf format, the documentation and deal ticket for all tradesThis helps to manage that ‘paper trail’ and allows a much clearer picture of deals that have been undertaken at any point of the year.

5) Ease of Use

The fifth reason is one of the main selling points of online trading which is ease of use and ease of access. Complex websites or apps can really defeat the point of moving to online platforms. The same goes for having to download sizeable software just to run the platform and can put many users off. IT departments might even reject the download of software if they deem it unsafe to use. iDealTrade does not require any software and is web based (it can be found on iDealTrade.net). Providing you are an authorised user then it really is as simple as accessing the web browser and logging in. 

6) Financial Strength Ratings

Keen readers of our regular insights may have read the previous insight on iDealTrade and remember the mention of Financial Strength Ratings (FSRs). Arlingclose have developed these ratings to assist with creditworthiness assessment of local authorities and the due diligence process when trading online. (please click here to read that insight which goes into more detail on these ratings).

If you are a local authority and are interested in signing up to the platform please email support@idealtrade.net. Similarly, for existing iDealTrade users, if you have any queries or would like a refresher course on using the platform then please do get in contact with the iDealTrade team.