What is a forex PAMM / MAM account? This is a common question that we often receive from those new to the industry. A Multi Account Managemet Tool, also known as a PAMM or MAM allows a forex broker to offer money management services to its client base. Introducing Brokers (IBs) are also able to use this service.
A PAMM or MAM is an additional software tool that brokers can purchase or lease. The fund manager is given access to a master account which oversees the accounts of investors, also known as sub accounts.
If your forex brokerage is considering purchasing a MAM / PAMM, we offer 5 reasons to consider the investment.
Volume
Based on our experience, managed accounts tend to attract larger deposit sizes than retail. For those new to forex, compare stock purchases to mutual funds. In most cases investors are more willing to allocate their funds to an investment than make the decisions themselves via single stock purchases. In forex it’s no different. Not only do MAMs attract larger deposit sizes, the accounts tend to remain active longer (assuming a sound manager has been selected).
The Competition Most Likely Has One
The majority of established brokerages already have a MAM set-up in place. To compete in today’s market space it’s essential to secure the software before the first potential asset manager knocks on your door.
Diversify Your Volume
In FX, volatility is the name of the game. Of course, in times when markets are not active retail trading volume tends to dry up. Offering a money management option is a way to combat these times of low volatility since certain algorithms often traded by managers are specifically designed for quiet times in the market. In addition, managers trading manually often have low volatility strategies in place, something many retail traders often lack.
Cost Effectiveness
The current market prices for MAM software are very reasonable, even for a broker just starting off; the potential return on the investment more than justifies the relatively small barrier to entry.
Ease Of Scaling Up
Once a MAM is installed, it’s quite easy to add multiple managers to the system. This can be a major boon to your brokerage, allowing your volume to grow in a relatively short period of time.
Do you have more questions about MAM software? Are you unsure which MAM is the best fit for your brokerage? We are more than happy to have a discussion to help you weigh the pros and cons. We look forward to hearing from you.
