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.
The 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 provider
This 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.
This 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.