1. 7 Things to Look for in a Forex Liquidity Provider

2. Introduction You are probably here because you are either an individual forex trader, brokerage or enabler in the forex market seeking to understand what to look for in a forex liquidity provider. Now, before getting down to brass tacks, let’s relook at a couple of things most of us already know.

3.  WHAT - What is Forex (FX) Liquidity? The ability of a currency pair to be bought and sold (traded) on demand without causing a significant change in its exchange rate is the definition of Forex (FX) Liquidity. The forex market thrives on liquidity, as it makes the market extremely efficient. Forex liquidity ensures - ● Easier transaction flow ● Cheaper costs of transactions ● Competitive pricing of currency pairs

4. There are two types of liquidity providers: Tier 1 and Tier2. Tier 1 The Tier 1 liquidity providers are the large global banks like HSBC, Citibank, Deutsche, etc. who provide price quotes for all the currency pairs that use ECN (Electronic Communication Network) in the market. Basically, these giant banks set the benchmark for the liquidity making the market for forex brokers and traders. Tier 2 The Tier 2 liquidity providers aka market makers is basically any small financial institution, or a prime broker like Sanfrix that is ready to sell or buy an asset at a publicly quoted price on a regular and consistent basis. They act as an intermediary between the end clients (traders) and the big banks.  WHO -

5. Finally, the ‘brass tacks’! Now that we have understood or re-established where we come from, let’s look at where we want to go. We need to choose a liquidity provider that will deliver to our requirements in a timely and consistent fashion with no holes in the system. The first step here is to ensure you have a good understanding of exactly what your in-house requirements are. Your brokerage size, target market, and business model make the framework before you even set out looking for liquidity providers in the forex market.  THE DETAILS -

6. Feature 1 The Offer A good offer will consist of a complete order book via trading platform and via FIX protocol showing the history of trade. A Liquidity Provider offering a range of products/instruments with multi-asset options like FX, commodities, index futures, spot metals, energies, and equities is usually an indicator of a good offer.

7. Feature 2 Execution Trade Execution being extremely fast (at least below 100 ms), without rejects or requotes, with a high time-priority execution and full post-trade transparency, are important features of a Forex Liquidity Provider that should hold good weightage in your decision.

8. Feature 3 Pricing Competitive spreads and commissions, but also low overnight fees. Best quality possible at the cheapest price possible.

9. Feature 4 Data and Price Feeds Stable and reliable feeds (both data and price feeds) are a must-have for a good forex liquidity provider. An ideal forex liquidity provider will have the latest most robust software that reflects real-time prices from the inter-bank foreign exchange markets. No delay whatsoever!

10. Slippage Slippage in the forex market usually occurs when volatility is high, based on news events or during times when the currency pair is trading outside peak market hours. A forex liquidity provider who can provide statistics on negative and positive slippage will add high value to your FX trading, regardless of the size of your business. Feature 5

11. Reporting Be sure to check if your liquidity provider offers full reporting packages including email reporting, full reconciliation reporting, profitability reporting, trade reporting (open and closed trades), FIX bridge reporting, tick data, order book access, etc., Anyone who understands the forex market will know the importance of these reports and include them in their offering. Feature 6

12. Full Range of Software Solutions The reason for this to be mentioned again outside of ‘Execution’ and ‘Offer’ is to stress the importance of a robust forex trading software/platform/interface. The ideal FX liquidity provider will have at least the following: ● FIX protocol connection & other API ● MT4/ MT5 bridge connection ● MT4 Gateways ● Connections via reputable MT4 and MT5 bridge providers Feature 7

13. Once you have filtered your options using the above-mentioned criterion, you will realize that finding someone with the technology, choices, experience, and credibility is not as easy as most of us might have initially thought. But the good news is you are halfway there!  CONCLUSION -

14. Here’s how Sanfrix can help you on this journey...

15. Sturdy CRM customised for FX brokers with multi-tier affiliate management, unified communications, KYC, customer journeys, insightful reporting and more. COMPANY INCORPORATION Sanfrix has initiated several brokerages from various jurisdictions and can help you too, making the entire set up hassle-free. TECHNOLOG Y We offer MT4 / MT5 Whitelabel solutions. Advanced technology and reliable solutions at an affordable cost. LIQUIDITY We offer deep institutional liquidity with customised pricing and execution analytics to make sure all your liquidity needs are met. CRM & BACK-OFFICE STRATEGIC PARTNERSHIP Continued strategic partnership, free consultation support and 24/6 customer support from our Chief Success Officer.

16. Contact Us Sanfrix can help you with all your brokerage needs and has helped several forex brokerages double their profits by simply implementing the right tools. Question is… Will your brokerage be one of them? Request your FREE quote today! +65 9860 7215 sales.sanfrix sales@sanfrix.com t.me/sanfrixltd