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How is an FX Brokerage Structured?

Boston, MA February 14, 2011

Recently we were approached by one of our customers concerning the organizational structure of his brokerage.  Specifically, he wanted to know how it should look as the firm grew, what type of positions he would need to fill, and what titles to provide his staff.  Having experience both in setting up FX brokerages as well as working in them, we put our heads together to come up with a few guidelines for the customer to follow.

We decided to split up the answer to this question in a few segments since a thorough answer can get into some detail.  For today’s installment we’ve outlined the main components of a brokerage, which is attached as a PDF file in this posting.  In addition, you’ll find some general descriptions of the responsibilities of the various departments below. 

Sample Brokerage Organizational Chart

Click to Enlarge

 

Department Responsibilities   

CEO - Responsible for driving overall growth of the brokerage. The CEO relies on his inner circle of managers and department heads to focus on specific parts of the company.\

Diagram of CEO's "inner circle"

Marketing Department – The content of the website, advertisements, promotions, emails newsletters, SEO (Search Engine Optimization), Social Media Presence, planning seminars/expos, and data gathering are all responsibilities of the marketing department.  An effective marketing department will adapt to new mediums of promotion, for example social media, to keep ahead of the pack.

Marketing department structure of a typical FX brokerage

Sales – Does not involve just onboarding new clients, but also maintaining relationships with existing customers to ensure a satisfactory experience; a large portion of a broker’s revenue is generated from traders who are pleased with their broker.  Business development as well as IB relationships also falls under this category.  Due to the world-wide appeal of FX, the sales department should have round the clock shifts.

Sales department structure of a typical FX brokerage

IT – The IT department is responsible for the overall maintenance of the firm’s servers, network, telephones and individual PCs.  Additionally, the IT department must backup all sensitive data as well as have an emergency plan in place for unforeseen outages.  This final point is crucial for a brokerage since stability in online-trading is a must.

Diagram of a typical IT department of an FX brokerage

Compliance – All legal aspects of the brokerage are handled by the compliance department.  This includes accounting, settling disputes such as trade audits as well as lawsuits.  Since large amounts of money are transacted in an FX brokerage, it is essential to have a compliance department.

Diagram of the compliance department of a typical FX brokerage

 

Support – The main responsibilities of this department are to provide real-time support to customers.  This includes answering inquires as well as performing specific account related request such as deposits, withdrawals, and closing accounts.  To stay competitive, a support staff should also have round the clock shifts.

Diagram of the support department of a typical FX brokerage

Finance – Naturally all monetary decisions fall under the umbrella of the finance department.  The execution model of the brokerage, for example, an STP set up, will make it easier or more difficult to predict revenue.  Many departments will work closely with the finance department so it is important the staff is well versed in all facets of the business.

Diagram of the finance department of a typical FX brokerage

Human Resources – The human resources department has the same responsibilities you would find in any business. They are responsible for finding qualified candidates for your fx brokerage and should work closely with all department heads in job description creation to ensure that it clearly represents the desired skills for an fx brokerage team member that may be outside of the human resource department's area of expertise. HR would also be responsible for creating an employee handbook and managing internal personel issues such as vacations, conflicts, etc. Office management would be responsible for supplies and infrastructure vendors and fall under the perview of human resources.

Diagram of the HR department of a typical FX brokerage

Final Thoughts

We’ve intentionally left out a development team since we’ll assume the broker’s software is outsourced. Secondly, this outline was designed to represent a mid-size brokerage.  We haven’t come up with a number yet but in case you were wondering why there are so many support staff, remember we are dealing in a 24 hour market.  We are always open to any questions/comments you have on this posting.

Posted March 11, 2011 by Jonathan Baumgart