The Role of Liquidity Providers in the Currency Market

If you are interested in becoming a liquidity provider, be sure to do your research and understand the risks involved before making any decisions. Brokerages provide traders with access to platforms enabling them to trade different asset classes. We support numerous brokers who approach us for our technology and liquidity know-how so they can service their clients in the most professional way.

How to Find Forex Liquidity Provider

Fourth, liquidity providers can use their capital to speculate on the market’s direction. By correctly predicting the direction of the market, liquidity providers can make a significant profit. Second, liquidity providers are able to hedge their risk by diversifying their portfolios across a number of different securities. This diversification helps protect the liquidity provider from losses if one security becomes unexpectedly volatile.

Currency Market Liquidity

Low liquidity market conditions increase the chance of slippage due to lack of market depth and can be exacerbated by market volatility. The difference in time zones means that liquidity conditions can be broadly split into Asia, London and US sessions. London trading session offers the best liquidity condition for FX as it is strategically straddling between the 2 sessions whereas Asia time zone offers the least liquid conditions. According forex liquidity providers to the BIS Survey in 2019, the daily average volume of FX stood around$6.6 trillionmaking FX the largest financial market in the world. This explains the essential requirement of a liquid market, without which the FX market will not be able to function effectively and allow market participants to transact with each other at high speed. Some providers may use outdated technology, while others may use cutting-edge technology.

So, a liquidity aggregator is software that allows brokers to get the necessary bids at the best prices collected from different liquidity providers. The majority of Forex brokers (more than 90%) do not have access to the liquidity of Tier 1 and specified exchanges because Tier 1 providers work only with large volumes. Therefore, there are smaller providers of liquidity of Tier 2, who act as intermediaries between brokers and Tier 1 institutions.


The notably high amount of currency market liquidity typically available allows for competitive dealing spreads and the capability of the market to absorb large orders without affecting the market. Binary Options do not use live quotes, but mainly an algorithm to trade using expiration time. Therefore, binary options mainly use binary options broker trading software with no need for any separate liquidity provider. In the US, there are a number of Forex liquidity providers, including banks, investment firms, and hedge funds. We searched and tested several companies in the market and here we provide the list that we selected as the best.

How to Find Forex Liquidity Provider

This currency pair typically has an average daily turnover of 400 billion USD. Spreads in the “Swissy” as the currency pair is known are typically 2.5 to 5 pips wide. The U.S. Securities Exchange Commission defines a “market maker” as a firm that stands ready to buy or sell stock on a regular and continuous basis at a publicly quoted price. A real estate transaction typically involves much more than a two or five day settlement period, with some real estate transactions taking years to complete. Slippage refers to the price that are executed at a level different from the one that we anticipated.

The Best Forex Liquidity for Your Brokerage or Exchange

Make sure to choose a provider that is available to answer your questions and resolve any problems you may have. By considering these factors, you will be able to find the best liquidity providers in Forex. A market maker is typically an entity that continuously buys and sells an asset class at an openly quoted price in the OTC market.

How to Find Forex Liquidity Provider

In our forextrading sessions part of the School, we’ll explain how the time of your trades can affect the pair you’re trading. The U.S. dollar is the medium of exchange for many cross-border transactions. Also called “petrodollars.” So if Japan wants to buy oil from Saudi Arabia, it can only be bought with the U.S. dollar.

How to Find Forex Liquidity Provider in 2023

Technically, retail forex traders do not have direct access to “Tier-1” liquidity but will do so via Tier-2 LPs instead. Tier-2 LPs establish bilateral relationships with multiple Tier-1 LPs, giving them access to more liquidity which in return allow them to offer competitive FX rates to retail brokers and their clients. Some of the largest liquidity providers in the world include banks such as JPMorgan Chase, Goldman Sachs, and Citigroup.

  • Investment Limited cannot and will not accept clients from outside European Economic Area and from Belgium, Switzerland and USA.
  • When the market is highly liquid, there will be many market participants entering buy/sell orders creating market depth.
  • A simple check shows that last year, Purple Trading used four different liquidity providers.
  • Companies or individuals who offer capital to a financial institution or market maker to trade securities or financial instruments are known as liquidity providers.
  • Our liquidity is best combined with the leading industry trading platforms to provide the ultimate in performance and user satisfaction.
  • In this model, the ECN broker passes through your order into an ECN pool where orders are matched with banks, hedge funds or institutional brokers.

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