The Truth About Major Exchanges’ Brokerage Model: Prioritizing Profit Over Ethics

  • November 20, 2023
  • Admin_Blockchain
The Truth About Major Exchanges’ Brokerage Model: Prioritizing Profit Over Ethics

Conventional brokerage models favor institutional investors, leaving retail investors at a disadvantage. Major exchanges still cling to a biased brokerage model favoring institutional brokers. Though there are many instances of fraud and market manipulation, they turn a blind eye.

Ducking The Penalties

Exchanges have established penalties for insider trading and market manipulation. But, detecting such activities is difficult. Years pass by the time justice strikes, leaving retail brokers hapless. In contrast, a retail broker caught manipulating faces restriction and severe penalties.

Goldman Sachs paid minimal penalties for the LIBOR case. Moreover, they avoided facing major consequences from the exchanges. The firm continues to operate without any red flags. Wells Fargo remained scot-free in its accusation for the Heinz acquisition. Exchanges pretend these incidents never happened. Furthermore, they allow manipulators to continue business as usual.

How Does The Current Brokerage Model Show Prejudice?

  • Lack Of Real-Time Data

Non-transparency and absence of real-time data help market-makers to exploit the retail sector. Therefore, outdated or manipulated prices lead brokers to losses due to false high/low demand.

  • No Universal AI tools

AI tools, advanced trading features, and bots are only accessible to  wealthy investors. Retail players rely on market movements and accept risks instead of informed decisions.

  • Regulatory Supervision Is Minimal

Not all traders have access to AI tools. Therefore, this makes it impossible to verify the integrity of the information received. Risk management becomes a guessing game.

  • Lack Of Financial Inclusion

Becoming a broker requires passing examinations. Moreover, it involves waiting for months, and making a large initial investment. Most brokers end up working for institutional traders to save money. Therefore, a small group of institutional brokers regulate the markets. Those who manage to start their own firm lack AI tools, real-time data, and resources to sustain it.

  • Lack Of Cloud Solutions

As of 2023, 94% of enterprises use cloud services, and 67% of infrastructures are cloud-based. Hence, some major exchanges are still slow to adopt cloud technology. Without cloud integration, instant sign-up, low-cost launch, and instant market access are unfeasible.

Cloud-Based Brokerage Model – A Solution 

PayBito, a white-label crypto brokerage platform, offers a high-end subscription-based platform.  It makes use of the Brokerage as a Service (BaaS) model, alongside cloud technologies. PayBito allows any broker to start a brokerage firm within days. It provides access to algorithmic trading tools and AI-powered analysis for better outcomes.

  • Introducing Democracy In The Market

BaaS enables retail brokers to establish customized brands with  solutions for their clients. Therefore, this increases the number of legitimate players in the market. Moreover, it improves transparency and equal opportunities by facilitating the sharing of real-time data.

  • Universal AI Tools

A cloud platform enables access to high-end tools and bots through subscription services. Newcomers can analyze market trends and execute orders like institutional brokers. Hence, AI can enhance regulatory supervision.

  • Financial Inclusion

A cloud-powered exchange makes it effortless for anyone to start a brokerage career. PayBito offers a cloud-based crypto trading platform for a monthly fee of $49.99. Promoting financial inclusion diversifies the market and helps detect and end market manipulations.

Also Read- India’s Push for Digital Rupee Amid Crypto Concerns

Looking Forward

Modernizing, democratizing, and innovating the market are key to its growth. Embracing cloud solutions and providing equal access to tools, information, and resources. Therefore, this will benefit the entire market in the long run.

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