Liquidity Providers

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BidFX is the leading EMS for the FX market and provides innovative solutions for the changing FX environment. With market-leading trading and workflow technologies, they provide clients with a state-of-the-art execution management system. They provide…

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Verified

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Centroid is a technology and platform provider that combines analytics, automated risk management, and advanced brokerage services.

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Currenex provides clients with the service of gaining access to disclosed and undisclosed liquidity. Currenex is one of the most significant sources of foreign exchange liquidity in the market. The company focuses on proving advanced…

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DooClearing is part of the Doo Group and aims to provide institutional and custom-level liquidity access and clearing services for Forex and CFDs on equities, futures, commodities and other financial instruments. With a robust clearing…

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Easy FX Solutions is a forex technology provider. It helps companies develop and expand their businesses. Financial instruments and results created by Easy FX Solutions are all that Forex dealers may require in their day-to-day…

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Edgewater Markets is an industry leader in electronic forex liquidity and distribution to global institutional investors. Edgewater Markets offers customized trading solutions and continues to innovate by improving liquidity and access to credit, while providing…

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  • icon United States
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Equiti Capital is one of the leading financial services providers for Forex and CFD liquidity and is part of Ekiti Group Ltd. Equiti Capital is a registered trade name of Equiti UK Limited. Equity Capital…

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  • icon Jordan
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Fair Trading Technology provides technological solutions for established broker as well as for those, who are just planning to start their brokerage firm.

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Finstek is a Fintech technology provider that is offering scalable solutions designed for complex financial applications. Finstek has been developing technology products that would make the financial technology industry more efficient. The company offers the…

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Liquidity Providers


Forex brokers or “market makers” act only as intermediaries between traders and exchanges, but often they themselves do not participate in trading but receive income through commissions and providing funds to traders on credit. Forex brokers only provide traders with access to liquidity in the Forex markets.

Today, online currency trading is available to a wide audience, even if they have little capital. To trade almost any foreign currency, the user just needs to connect to the Internet and register a brokerage account.

 

What is liquidity in Forex?

Liquidity determines how quickly a trader can exchange one asset for another. For example, buy or sell TSLA shares for USD. This is one of the most important economic indicators reflecting the completeness of the sector. The faster it can be done with the least losses, the higher liquidity will be. High liquidity means:

  • That the order book is dense enough so that asset volatility is relatively small and the price does not fall/grow too quickly;
  • Low spread between the Bid and Ask prices;
  • At any second, a trader can sell an asset at the current market price.
  • Minimal delays in order execution and no slippage.

For example, a real estate purchase transaction can take from several days to several weeks. Therefore, real estate is considered a low liquid asset. Forex or cryptocurrency transactions usually take less than a day – this is an example of assets with high liquidity. In fact, most often, trades are executed almost instantly or with small delays when using limit orders.

But this does not apply to all trading pairs. Some of them are less liquid, which means they are much more volatile than more traded pairs such as USD, EUR, GBP, BTC, ETH and others. Particularly low-liquid pairs are sensitive to external events, economic data and news, because of which quotes can suddenly change by a lot. Ultimately, this affects the risks that investors take, potential returns and potential losses. Low liquid pairs can bring high returns, but the risk remains that the investor will lose a significant part of the capital. Accordingly, the less liquid the asset is, the higher the risks will be.

 

Signs of low-liquid exchange-traded assets:

Long delays

On the exchanges, orders can be processed for hours or not executed at all given sudden price movements. In this case, the owner runs the risk of not selling the cheapening share or cryptocurrency at the intended price.

High volatility

Sometimes the volatility of low-liquid goods reaches such values ​​that it is impossible to establish actual buy or sell orders due to rapidly changing prices. This increases the time it takes to buy and sell on exchanges and also leads to additional inconveniences.

Big spread

The spread on low-liquid pairs can reach several percent, which makes them practically unsuitable for short-term transactions. The larger the spread, the more the price deviates from the market value. In this case, the investor will not be able to quickly sell the asset at the current price, and, as a result, the transaction may be postponed for a long time.

 

Who supplies liquidity to Forex?

In addition to the broker and the trader, there is another market participant — a liquidity provider or a market maker. A liquidity provider supplies assets and currencies for trading, receiving income from the price spread when market participants buy and sell an asset.

 

What is a liquidity provider?

A liquidity provider is an individual or a company that owns a large volume of an asset. Liquidity providers are stable and trade by placing orders and controlling counterparty risk.

Liquidity providers are financial institutions such as banks, mutual funds and hedge funds, private companies, large investors and sometimes brokers themselves.

 

Why do they need to supply liquidity?

If liquidity providers did not provide the markets with assets and currency, the order books would be practically empty, and the volatility would become much higher, due to which the price of an asset could change by 10% in a matter of seconds. In the short term, this would mean huge losses to clients.

 

Where to find a liquidity provider?

On the Finarm website, you will find reliable liquidity providers and information on their key services. Finarm is a universal aggregator for FX & CRYPTO brokers that brings together the best liquidity providers.

 

Benefits of Finarm

Speed

With the help of the service, you can quickly find liquidity providers from the list.

Convenience

Easily find partners and suppliers through a convenient filter search.

Profitability

There will be no high advertising costs and high costs for other means of finding liquidity providers.

 

How Customers Access Liquidity

Retail investors cannot directly access exchange transactions of Tier 1 liquidity providers, i.e. banks and other financial institutions. They will need different products that brokerage companies provide.

 

Conclusions

A liquidity provider is an indispensable element in the financial market, without which currency volatility would have reached enormous values. On the other hand, these organizations are not aimed at helping in trade but rely solely on their own profits.

Highly liquid markets provide fast selling at market rates, minimal delays in order processing on exchanges and minimal spreads.