If birt is running a brokerage that doesn't accept clients in any means, there is absolutely no reason to operate this brokerage more so than having the ability to spoof trading results. Why?
1.) A market maker will keep the trades in house and never send them to a liquidity provider, which means they are not winning or losing by running any of their test accounts. Their results are basically a DEMO environment, hence his MDP account.
A MM earns money by the 90% of failing traders and at the end of the month the amount of losses(traders losing their capital) normally out ways the profitable traders and MM can continue to operate . Since PrivateFX is solely Private, meaning no outside clients, they can not Make money period. Therefore, we move to number 2.
2.) A ECN STP brokerage , would be earning solely from commission. Their commission bonus ( Only source of revenue ) would be dependent on two traders activities as PrivateFX is a Partnership. However, this wouldn't be logically as you would be paying yourself out of your own pocket. Sure, there could be tax incentives for this operation and an endless amount of loopholes including annual losses(write-offs) which can benefit this company. But that's another story.
Now in Birts article he states, '''Sure, it’s possible that someone with an awesome speed and liquidity access implemented the MDP strategy on a different platform and is hogging all the liquidity at the EA entry points,''
Which in fact can be true and maybe Birt is to blame for the ECN slippage . 😈 But that's still not logical as he is running a brokerage and once again, the profits that any of his accounts make are coming from his own pocket.
So whats the point of running a brokerage with no clients?
At this moment, it can be to establish better liquidity connections. What I mean by this, is that If a brokerage can produce high levels of volume, they would be able to land more deals with Top banks adding more liquidity to their source. Also, I'm sure some of you traders out there, know that you can negotiate spreads when high levels of volume are maintained. So is Privatefx negotiating better spreads with their liquidity providers ? Are they heading down the same road as collectivefx? Or is it what I mentioned in the first sentence of this post.
I really started to laugh when Birt said this. ' At this point, it might be that you’re better off trading MDP on an honest MM broker than on an ECN''https://eareview.net/rant/brokerage-interlude