What is liquidity?
Liquidity is a term commonly used in markets to describe the ease with which assets can be converted into cash. Liquidity is important for all traded assets and is one of the most important factors in making trade profitable. More liquidity in the markets means an easier flow of transactions, resulting in more competitive prices. Therefore, providing liquidity is a key factor for the proper functioning of asset markets.
Does a small broker need liquidity?
The short answer is yes, any broker would benefit from liquidity. The B-book, while attractive at first glance, carries a lot of risk, while the A-book may not seem a very profitable model. We, on the other hand, believe that the hybrid model is the optimal choice. In this article, we have detailed the pros and cons of each model and how to work with them.
What is a liquidity provider?
A liquidity provider is an intermediary company who supplies you with the bid and ask price of a traded asset with the intention of generating a profit from the commission on the trades. Liquidity providers allow buyers and sellers to trade easily without the need to find other individual traders, making the assets liquid.
The higher the liquidity, the quicker and better trade orders are executed, the happier your clients are. The provider of liquidity can be either a market broker or an institution that acts as a professional market maker on both sides of the trade.
How to choose a liquidity provider?
The provider you choose should be reliable and honest and have a good reputation. You should also keep in mind that liquidity providers are divided into tier 1, tier 2 and so on. Direct access to tier 1 providers, that is, Prime Brokers, can only be obtained after you pass their compliance.
Normally, it requires a license and white-list jurisdiction. In all other cases, it is worth choosing amongst the intermediaries.
Trusted forex and crypto liquidity providers
Bridge, API, Gate for MT4/MT5 and other platforms
Filtering and selecting quotes and orders
Forming your own Forex liquidity
STP and ECN technologies
您可以从UpTrader购买带有White Label MT4 / MT5的包装得到什么
Automatic transition of trades to the interbank market
UpTrader模式允许经纪商立即在A Book和B Book之间移动客户，而无需重启服务器。
EUR / USD，GBP / JPY和26种
NZD / SGD，USD / ZAR和等23种
标准普尔（S&P）500指数、道琼斯（ Dow Jones）30指数等10个。
BTC / USD，ETH / USD等30种以上
法国巴黎银行(BNP Paribas SA)、宝马(Bayerische Motoren Werke AG)和其他49家公司。
Сhecklist of things to look out for when assessing your specific needs
1. Liquidity package
One of the most important things a broker should look for in a liquidity provider is the liquidity package, that is, what assets and what liquidity are provided.
Nominal accounts in different currencies are a plus, as is the ability to accept all leading stable tokens and cryptocurrencies for deposits and withdrawals. These are just some of the aspects to consider, but it is important to make sure that your specific needs are fully met.
UpTrader can help you find liquidity with a wide range of instruments, including Forex, crypto, spot metals, indices, shares, bonds, and futures. It is of utmost importance that the liquidity provider gives you access to multi-asset liquidity along with historical data.
2. Fast execution
It goes without saying that the liquidity provider should offer the fastest possible execution of trades with requotes or slippage.
This is very important at the time when market news can have a strong impact.
3. Market depth
Most liquidity providers use this aspect as a key selling argument. Market depth is indeed a key factor as it gives an indication of liquidity and depth for a particular currency, for example.
The greater the number of bid and ask orders at a particular price, the greater the market depth.
This is another key aspect and one of the main aspects that companies would look at when searching for a liquidity provider.
Liquidity provider pricing should include competitive spreads, not to mention low commissions and swaps without compromise on either side.
5. Data flows
The liquidity provider must be able to provide reliable and stable client data flows.
Price flows should reflect real-time prices obtained from all relevant exchanges and the Forex interbank market. Delays in providing price data are likely to result in gaps.
6. Reporting requirements
Reporting is vital for optimal operations. The liquidity provider must be able to deliver an automated and reliable reporting system, which will also enable your compliance with regulatory requirements.
Report types to look for are trade reports, FIX bridge reports, swap and rollover reports, and order book access.
7. Customer service
The image of any company can be undermined if the customer support team is slow to react, responds unprofessionally and takes a long time to resolve client problems.
Therefore, it is important to get an impression of how the company communicates with you and how interested the company is in helping you in particular.
It is not always worth chasing after popular liquidity providers as they often offer higher prices for the same and sometimes even lower quality service, charging a premium for their name. It is the service that counts for your clients.
Therefore, when choosing a provider, focus on their professionalism.
To get more information contact us!