We can offer brokers
several options of obtaining liquidity. Each of the options has its pros and
cons, and they all depend on the requirements and possibilities of a given
broker. High-quality liquidity is only half the success of the company. Any
broker needs to not only provide their clients with a high-quality stream of
quotes but also to hedge their orders without losses in speed and quality of
execution, which is often a demanding task.
Our team has over 10 years’
worth of experience working with the liquidity providers. We have overseen
the integration of dozens of banks and brokers, and collected a huge
statistics on the quality and flow of execution. The performance of our
aggregator is based on these statistics, taking into account all the details
and features of a particular provider. To date, there are three basic
options for dealing with liquidity:
- Liquidity collected over the years,
through carefully selecting the best providers and adapting to their
characteristics;
- Liquidity of any provider selected by a
broker;
- Aggregator rental and its connection to
any number of liquidity providers.
Below, we are going to describe in detail the difference between each
of these options.
Our liquidityThe liquidity
offered by us is ideal since this is a high-quality stream with narrow
spreads and well-balanced performance. Its collection is being overseen by
our main partner, a European regulated broker. This option includes a
sufficient number of quality liquidity providers, and its effectiveness is
both time-tested as well as proven by multi-billion dollar turnovers.
A
single liquidity provider has several major advantages:
- No need to deposit funds to each provider
and move them between providers in hopes of adjusting imbalances;
- Margin netting requires a fraction of
client funds for hedging;
- It eliminates imbalances of open
positions from different providers as well as inefficient use of
margin.
A single providerThis liquidity has the
advantages of a single liquidity provider listed in the previous section,
but it also has a number of disadvantages:
- Unreliability of the stream can result in
the problems of the provider immediately becoming the problems of
the broker;
- It is often not a very dense and smooth
stream;
- Normally, it does not have narrow
spreads;
- The provider may widen the spreads and
worsen execution without the possibility of intervention by the
broker.
Several providersThis options works in the
opposite way – the flow can be tight and even, and the spreads narrow, but
there are problems dealing with multiple providers:
- The need to deposit money to each
provider;
- The need to monitor the distribution of
open positions and prevent imbalances;
- The need to have more funds for the
margin;
- Periodic need to transfer funds between
providers.
In addition to the option with an aggregated flow, we offer free
products such as provider management module and monitoring of imbalances.
Nevertheless, we believe this option is more difficult and time-consuming
for the broker. Broker must consider everything carefully before selecting
their own aggregation. Typically, this option is suitable for large
companies, while the single provider option suits all brokers, both large
companies and startups. This option combines the advantages of all liquidity
models.