When adding another asset class into an existing trading platform, it’s not enough for brokerage houses just to add new instruments to the platform; they also must first put in place the necessary infrastructure to allow for proper and efficient execution of trades.

The first step is connecting the appropriate pricing feeds to provide real-time market data on the price of the new asset class as well as the ability to execute trades against that price. If the feeds are not reliable, the trading capabilities related to the new asset class will not be able to function as expected.

Following this, brokerage houses will need to modify their existing margin and risk models to incorporate this new asset class as many new asset classes can have different levels of volatility and liquidity; therefore, the calculation of risks and the amount of collateral required will often need to be modified.

Once these systems are aligned, and all of the pricing feed, margin, and risk modifications are completed, the compliance department will review to see if the addition of this new asset class fits within the existing regulatory framework. There may also be reporting obligations and trade execution restrictions, as well as jurisdictional limitations on how this new product can be offered in various jurisdictions.

Finally, operational teams will make the necessary modifications and upgrades to the various platform systems to support the new instruments offered as new asset classes will be added. When all of these components work in unison, it enables brokerage firms to effectively launch new asset classes while still maintaining a compliant, safe, and stable trading environment.