Forex brokers get market access through liquidity providers. They offer pricing and execution to brokers and absorb risk. So what exactly do liquidity providers do?
Pricing And Execution
Liquidity providers generate tradable bid/ask quotes on currency pairs, CFDs, and other instruments. This gives brokers market depth to display to clients.
They also handle order matching and taking the other side of client trades. By absorbing risk, they facilitate trading and earn on the spread capture.
Serving Brokers Of All Sizes
New brokers lacking infrastructure depend on liquidity providers for access. Established brokers may also partner with them to complement internal capabilities or improve pricing.
While brokers focus on client relations and features, liquidity providers donate seamless pricing and trade settlement in the background. It’s a symbiotic relationship.
Technology Solutions For Brokers
Beyond basic liquidity, providers also offer turnkey technology solutions for brokers. This includes bridge APIs for feeding pricing data and managing transactions through platforms like MT4/MT5.
White label platform development, risk management tools, and back-office services may also be provided to brokers looking to minimize infrastructure costs.
By leveraging liquidity providers, brokers can focus on marketing and acquiring clients rather than building expensive technology from scratch. This speeds up operations and launch timelines significantly. The right liquidity partner acts as a one-stop shop in getting a brokerage off the ground and running optimally.