The Best Liquidity Provider? It's not all about the lowest spreads

As an up-and-coming, developing forex brokerage, one of your most pressing concerns is what to consider when choosing the best liquidity provider? Should you trade with a market maker or an STP broker? Should you depend on only one liquidity provider?

Forex trading is a soaring market that is continually developing. This results in numerous possibilities, but due to the increasing presence of brokers and liquidity providers in the market, the selection of trade partners should be a thoroughly deliberated decision. To guide you through this process, below you will find suggestions on what to pay attention to as you choose your liquidity provider.

What is the role of a liquidity provider?

A liquidity provider is an institution that brings brokers and prime brokerages together. It acts as both the buyer and seller of a particular asset and can also direct orders straight to the market. Liquidity providers ensure greater price stability and help brokerages hedge their risk.

What features should best liquidity provider have?

Stability – Ideally the liquidity provider has been operating for a period of time and has a proven record of regulatory compliance and long-term partnerships. The liquidity provider should not be a temporary presence on the market. Furthermore, the liquidity provider should possess a regulatory license from an internationally reputed financial regulation agency, such as the UK’s Financial Conduct Authority.

Excellent offers – The liquidity provider should have broad, evolving offers, including tailor-made solutions, which enable brokerages to gain the competitive advantage. It is therefore advisable to conduct market research on prices and price feeds offered by different providers. Liquidity providers should constantly develop and modify their offers to keep up with the latest market trends.

Flawless contact – Although trading mostly takes place online via FIX API and MetaTrader 4/Metatrader 5 access platforms, you should ensure that phone contact with your liquidity provider is an option. If you are making an enquiry, see how well and how fast it is handled. This will also give an idea as to the liquidity provider’s commitment to its clients.

It takes weeks to establish and setup a connection with a liquidity provider. Therefore, it is imperative to thoroughly examine your needs and evaluate how your liquidity provider can respond to and satisfy those needs. To get started, contact Doo Clearing’s Specialist team today for a insightful preview of how we can bring your brokerage to the next level.

London office

Tel: +44 2071128722

Email: [email protected]

Web: www.dooclearing.co.uk

Hong Kong office

Tel: +852 95612013

Email: [email protected]

Web: www.dooclearing.com