Retail investors and brokers share a common goal: successful, sustainable trading. But their priorities don’t always align perfectly. Investors want speed, flexibility, and competitive pricing, while brokers must balance these expectations with regulatory obligations and risk management. The good news? These objectives can converge. 

What Good Practice Looks Like 

The UK’s Financial Conduct Authority (FCA) recently conducted a multi-firm review of desktop and mobile trading platforms used by retail investors. The findings highlight both good practice and areas for improvement across three key areas: 

Target Market Definition 

Some firms clearly defined which customer segments their products were designed for and even identified “negative target markets”, investors for whom certain products are unsuitable. 

Others failed to specify target markets at a granular level. For example, offering low-risk and high-risk products side by side without clear guidance can lead to inappropriate investments. 

Revenue Models 

• Good practice: Subscription models that consider whether pricing reflects fair value based on trading volumes. 

• Concerns: Some firms couldn’t demonstrate how they assessed fair value, risking misalignment between fees and customer benefit. 

Appropriateness Testing 

• Good practice: Firms using robust, varied tests to ensure customers understand complex products before gaining access. 

• Concerns: Inconsistent application of these tests means some investors may be exposed to products they don’t fully understand.
  

What Investors Want 

We understand that regulators aim to protect retail investors from misleading or exaggerated claims. But what do investors actually want from their online trading platforms? 

A recent survey of South African investors by market research company Kantar offers snapshot.   

For respondents, fast execution was the top priority, with high leverage options and consistently low spreads also seen as key features. 

Aligning Investor Needs with Broker Responsibilities 

Investors understandably want fast, reliable execution and competitive pricing. They also expect flexibility and choice, with platforms that empower them to trade on their terms. At the same time, it’s essential that the products and services offered are suitable for their needs.  

You can’t always give investors everything they want, but you can ensure they get what they need: clear information, the right tools, and the support to make informed decisions. These goals aren’t in conflict. By aligning investor needs with responsible practices, brokers can build long-term relationships, grow their businesses, and nurture confident, engaged traders. 

A partner for success 

For brokers, keeping competitive while staying compliant can seem like a daunting challenge. Here’s where the right liquidity partner can make all the difference. 

Liquidity providers can play a crucial role in helping brokers strike the right balance between investor expectations and regulatory responsibilities. By offering deep, consistent liquidity and competitive pricing, LPs enable brokers to deliver fast execution and tight spreads. At the same time, LPs can support brokers in designing product offerings that reflect fair value and align with the needs of clearly defined target markets. When brokers partner with LPs who prioritise transparency, risk management, and technological innovation, they’re better equipped to meet regulatory standards around appropriateness testing and product suitability.  

At best, your LP is your strategic partner, helping build platforms that empower investors while protecting them, helping brokers grow responsibly and sustainably. 

Do you want a tailored liquidity solution that can help your business stand out in a competitive and high regulated market? Get in touch with Finalto to learn more about how we partner with our clients to help deliver sustainable growth. 

All opinions, news, research, analysis, prices or other information is provided as general market commentary and not as investment advice and all potential results discussed are not guaranteed to be achieved. The information may have been derived from publicly available sources, company reports, personal research, or surveys. Past performance is not indicative of future performance. Trading carries risk of capital loss. Service available to professional clients only.