Business process and outsourcing
Deploying an effective Disaster Recovery strategy for forex brokerage operations By Gerry O’kane
Business continuity in the face of disaster or bad luck is crucial for any business but in the fastmoving world of FX, brokers will find that without adequate plans they could be put out of business. Maintaining 100% of a broker’s operation can at least treble IT costs, but more inexpensive solutions can bring them back online within 10 minutes. Companies need to identify their pinch points, recognise risk and not allow a strategy to be dominated by a focus on shortterm margins. The miserable truth is that many FX brokers believe themselves protected but have untested systems, weak protection and may even be in breach of regulations
s the past few years have shown risk comes in many forms: central bank intervention, crumbling credit lines, terrorist attack or natural hazards. Making sure your business continues operating in the face of any of these adversities is the difference between having a company or not.
not an option to have nothing, but I’d say most of the industry is not aware of the range of issues in having a proper DR system – they’re led by sales rather than IT,” warns Tom Higgins, chief executive officer (CEO) of UK based Gold-i, a brokerage systems specialist. The business of disaster recovery (DR) has been around for as long as companies have been using computer systems. Essentially it is the corporate response to something which knocks over its computer systems – getting business up and running again. In the FX world all but the biggest forex firms use third-party DR solutions because of cost.
“The question is ‘how long can you afford a full stop’. For FX brokers in most circumstances you can’t!” warns technology provider Fair Trading Technology’s CEO, Tim Haman.
The problem is getting the brokers to recognise the full range of threats they face, understand the technical implications of one solution over another and assess the costs versus the risk.
Paul Pocock, managing consultant business continuity at IBM, agrees. “If something goes wrong and the brokerage is out of the market for any length of time, clients will go to the competitors, so it’s critical for businesses to able the access a back-up structure.”
That many FX brokers still need to both identify their weak spots and understand the realities of DR becomes abundantly clear when even the simple of process of backing up computer data is something that a significant minority fail to do correctly. “You need regular backups and all broker companies have some variation on
this but we’ve found only about 10% test them and we’ve been called in after a crisis to find the backup has been corrupted,” illustrates Haman.
Compliance in spirit not practice This sort of chaotic approach to DR continues to fly in the face of regulatory requirements. Since the terrorist attacks of 9/11, the US National Futures Association (NFA) “has devoted increased attention to issues relating to disaster recovery plans”.
But assessing risk is not something firms tend to be too good at, especially when there is a cost involved in mitigating them. In the financial sector, as it continues to reel from the collapse of sub-prime debt and its domino effects, has tended to see the risk of operational failure and disaster recovery as an old chestnut that has been well and truly roasted. Yet the worrying truth is that many brokers, including those in the FX world, are only paying lip service to the necessity. “Look it’s required by regulators to have a disaster recovery solution and it’s
74 | Institutional FX Services - The Brokers Handbook 2012/2013
Institutional FX Services - The Brokers Handbook 2012/2013 | 75
Published on Apr 12, 2013
“Ideally it is often better to have a server in london and another in Zurich and so on, a solution used by the bigger players. But then agai...