For foreign exchange brokerages that want to offer the MT4 trading platform to their clients, there are two options. You can obtain either a MT4 Full Server License, or you can purchase an MT4 White Label. There are multiple posts on this blog that address what is involved in obtaining or managing an MT4 White Label. This blog post will focus on the costs and benefits of obtaining an MT4 Server License, so you can decide whether it is time for you to upgrade your MT4 White Label to a full Server License, or if you are thinking of starting a new FX brokerage, whether you should start with full MT4 Server License.
A full MT4 Server License confers multiple benefits on the holders of the license holder. To obtain a MT4 Server License, you need to purchase the license from Metaquotes. To get your server license running, you will need to obtain multiple other pieces of software and hardware to get your server license brokerage up and running. First, this blog will run through the different supplies you will need to obtain after you have purchased the license to get your technology running.
- Server Space – Once you have purchased your license, you will need a computer to install and run the license upon. There a variety of different options to choose from, from cost effective bare bones servers to more expensive, high-powered servers. It is common to locate your MT4 Server in a data center in or near a major financial center to improve your ability to connect to top tier liquidity providers such as NY4 (New York) LD4 (London) or TY3 (Tokyo.) You can purchase one server and stack you live, demo and test servers on the same piece of hardware, or you can buy multiple servers for each license. One common setup is to have your Live trading server in a high-powered machine, and your demo and test server in a lower quality machine or perhaps even to use a cloud server. Depending on your client base, or the type of traders you anticipate you may decide you need a higher or lowered powered server for your brokerage. You’ll be charged a monthly hosting fee by your server provider for hosting your MT4 Server License on their hardware.
- MT4 Bridge – Your MT4 Bridge may be the most important piece of software for your MT4 Brokerage business. Your MT4 Bridge is the piece of software that connects your MT4 Server license to other trading servers, allowing for the transmission of data back and forth between your brokerage and other brokerages. Your bridge will bring pricing data in from liquidity or price feed provider, and will transmit the client from your clients that you choose to clear out to your Liquidity Provider (LP.) Bridges offer a wide range of functionality. Some bridges will just connect your MT4 Server to a single liquidity provider, while other bridges can connect to multiple LPs to bring different price streams into your server. You can also setup aggregation systems where your brokerage only displays the best bid and the best offer on each symbol at any one time. This is called a Best Bid Best Offer (BBBO) engine. Most new or smaller brokers can get away with having one primary LP and one back up LP and won’t derive many benefits from aggregating liquidity across multiple providers. Aggregating liquidity involves having clearing accounts will multiple brokers, so it represents a large logistical headache for your brokerage to overcome.
- Price Feed/Liquidity – In order to stream prices and execute your clients orders, you will need a price feed to plugin to your MT4 Server through your bridge. Deciding who to use for your liquidity provider is an important decision, but having a full server license gives you a great deal of flexibility. All you need to connect to a new LP is to open the corresponding trading account with the LP and then have your bridge provider connect. Some important things to consider when deciding on which LP or LPs to connect to your MT4 Server are
- Spreads – What type of spreads are you being offered by your liquidity provider? This will determine how much money you will be able to make on the flow that you STP.
- Commissions – Will your LP be charging commissions on top of the spread? Most LPs charge some type of commission on volume traded.
- Minimum– Is there some type of minimum trading volume that your LP will impose?
- Instrument Variety –What products does your LP offer that you can then in turn offer out to your clients. While having a lot of products is not a silver bullet for attracting clients, it does offer a way for you to market your brokerage and stand out from the crowd. Making sure that your LP has crypto-currency trading is important!
- Service and Reliability –Does your LP have 24/7 support? How reliable is their service? Are your questions answered promptly? Your LP is going to be an important partner in your business, so ensuring that you have a reliable LP is extremely important! You will likely find that the better/more reliable the LP the more likely they are to charge a higher minimum. Like everything in life, you have to pay for quality!
- Plugins– Once you have purchased your server, decided on your hosting provider, and connected to your LP thought your bridge, you need to decide on what plugins you want to add on to your server. While the full MT4 Server License is quite versatile, you will likely need a few more tools to support your clients. Many of the most common tools you will need to run your brokerage you will need to purchase from third party vendors. These plugins include your PAMM system, your bonus plugins, virtual dealer (if required,) your CRM and many other features. There are great deal of providers for these tools, and Global Group Technology offers a full suite of MT4 plugins as well to meet your needs.
As you can see, there is more to operating a full MT4 Server license then just purchasing the license from Metaquotes. Managing a MT4 Server license entails taking on additional ongoing costs, but provides you with maximum flexibility in managing your business. If you are interested in learning more about the pros and cons of managing a full server license, please contact us today.