7 Things to Look for in a Forex Liquidity Provider

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7 Things to Look for in a Forex Liquidity
Provider
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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, lets
  relook at a couple of things most of us already
  know.

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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

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WHO -

• 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.

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THE DETAILS -

• Finally, the brass tacks!Now that we have
  understood or re-established where we come from,
  lets 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.

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Feature 1

• The OfferA 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.

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Feature 2

• ExecutionTrade 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.

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Feature 3

• PricingCompetitive spreads and commissions, but
  also low overnight fees. Best quality possible at
  the cheapest price possible.

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Feature 4

• Data and Price FeedsStable 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!

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Feature 5

• SlippageSlippage 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.

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Feature 6

• ReportingBe 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.

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Feature 7

• Full Range of Software SolutionsThe 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

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CONCLUSION -

• 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!

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Heres how Sanfrix can help you on this journey...
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• Sanfrix has initiated several brokerages from
  various jurisdictions and can help you too,
  making the entire set up hassle-free.

• We offer deep institutional liquidity with
  customised pricing and execution analytics to
  make sure all your liquidity needs are met.

• Continued strategic partnership, free
  consultation support and 24/6 customer support
  from our Chief Success Officer.

• COMPANY INCORPORATION

• TECHNOLOGY

• LIQUIDITY

• CRM
• BACK-OFFICE

• STRATEGIC PARTNERSHIP

• Sturdy CRM customised for FX brokers with
  multi-tier affiliate management, unified
  communications, KYC, customer journeys,
  insightful reporting and more.

• We offer MT4 / MT5 Whitelabel solutions. Advanced
  technology and reliable solutions at an
  affordable cost.

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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_at_sanfrix.com
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