Adopting Trading for the API Economy

One of the most important characteristics of good software design is its extensibility. This design principle has become more and more of a must for any software architecture in an increasingly connected and interdependent world. The introduction of Application Programming Interfaces (APIs) was the solution for extensible software architectures. The use of APIs gave programmers the ability to allow other programmers to access their code in a controllable way. Modern software platforms leverage their capabilities through APIs by exposing and allowing the reuse of their internal methods. Google, Facebook, Amazon, Twitter among others offer APIs to their platforms. As a result, trading platforms could not be excluded from this paradigm shift. As both, trading methods and trading itself becomes more advanced, the use of trading APIs becomes a necessity. 

The advantages of an API are usually obvious. They have many uses, such as data sharing, system integration, system extension and many more, but more importantly they can be used to handle cases unknown at design time. On the side of the API provider, the business benefit is the ability to integrate the software system into different business processes and leverage its use. On the side of the consumer, the benefit is that he can reuse functionality built by others and develop added value without the need to reinvent the wheel. Through the use of APIs, such cases ought to be handled without the need to modify the internal system. Moreover, APIs are used as a tool to build win-win relationships and avoid unnecessary competition. Different business entities do not need to get into an unnecessary elimination war, since through the use of an API they can develop different components of a larger system side by side. 

In trading, via an extensible open API architecture, traders, brokers and third-party developers can gain the ability to build tools on top of a trading platform’s infrastructure. Such an API can permit users to get information about trading accounts, trading history and historical price data, as well as execute trading on behalf of trading accounts. For some this technology has allowed the creation of a whole ecosystem of applications that expose the capabilities of a trading platform’s API, such as connection to trading analysis services, integration with other trading applications and even the creation of custom-made trading interfaces by brokers.

Trading software and the trading industry overall have gone through some major transformations during the last few years. As technological landscape became more and more complicated, and as new technologies, like the web and mobile devices, were introduced, brokers were forced to move from developing proprietary incompatible trading platforms to widely used third-party software, MT4/5 and cTrader, to name a few. This allowed brokers to manage the technological complexity, as well as to reduce their development costs by outsourcing the trading platform development effort to third-party providers, as well as to offer a common user experience to traders. With the rise of third-party trading platforms and the decline of proprietary development, the need for APIs became more prominent. Brokers needed to offer value-added services to their clientele and to accommodate custom client needs, but development didn’t take place in-house any more. Therefore, trading platforms had to provide APIs to accommodate these evolved requirements.

No matter how well a trading platform has been designed, and regardless of the number of features it offers, it is impossible to cover all brokers’ and traders’ needs and imagination. API-enabled platforms can create unlimited opportunities for innovation and new business. In the trading world, API economy will be in the centre of the next major developments and software companies that have the API thinking as part of their vision and in the core of their strategy, will dominate the industry.