Top 7 Liquidity Providers of 2024
Dec 28, 2023
Every Forex trader aspires to multiply their investments and increase their returns. One crucial factor that traders consider when selecting a brokerage is the level of liquidity it offers. The higher the liquidity and the deeper the order book of a brokerage, the more competitive its spread can be. Therefore, a broker that has access to a reputable liquidity provider gains an edge over its competitors.
But which liquidity provider should you choose as your business partner? In this article, we will explore the top seven options for Forex brokers in 2024.
- An ideal liquidity provider should offer instant trade execution, low fees, tight slippage, and price stability.
- The best liquidity providers offer a wide range of financial instruments, including FX, metals, CFDs, cryptocurrencies and energies.
- When choosing a liquidity provider, consider factors such as trustworthiness and regulation, range of available instruments, execution speed and quality, competitive pricing, integration options and connections, and reputation in the market.
What are Liquidity Providers?
Liquidity providers are entities that ensure there is sufficient liquidity in the market by offering orders to fill the order books of brokers and exchanges. They connect brokerage platforms with an interbank market, where big players like banks and hedge funds trade with each other directly.
Liquidity providers offer their services not only in the Forex market but also in other asset classes, such as CFDs, ETFs, and cryptocurrencies. Their primary goal is to provide traders with instant order execution and minimise spreads and price slippage.
Let’s explore some of the top-rated Forex liquidity providers that can help drive brokerage business to new heights:
B2Broker has been a top player in the liquidity provider market since its establishment in 2014. The company offers a wide range of trading pairs for Forex, up to 1,500 instruments and access to deep Tier-1 liquidity pools in multiple markets.
In terms of execution time, B2Broker connectivity provides an impressive 12 milliseconds. This company also offers both margin and CFD instruments, with a range of leverage multipliers up to 1:100, giving partners flexibility to implement in their trading strategies.
One of the key features that sets B2Broker apart is their access to 20 levels of market depth, enabling partners to place orders at any level of the book. In addition, they offer a diverse range of assets, including currencies, metals, energy, indices, stocks, ETFs and cryptocurrencies.
The company also provides various channels for liquidity linkup, including FIX API for DMA access, ensuring the best price quotes and spreads for clients. Moreover, they offer a range of technology solutions for launching a complete end-to-end Forex brokerage business: Trader’s Room, PAMM and MAM services, cloud-based CRM, WL trading platforms, and others.
Leverate has been a well-known name in the brokerage industry since its establishment in 2008. With over a decade of experience, the company has maintained its position as a leading technology and services provider for brokers.
Leverate is known for its LXCapital liquidity package, which provides access to top-tier liquidity sources and competitive rates, with more than 2,000 instruments covering Forex, CFDs, stocks, commodities, indices, futures and cryptocurrencies. Powered by their advanced multi-connected interface, clients have full control over system functions, and orders are filled with low latency.
In addition to the liquidity solution, Leverate also offers related services such as LXFeed for accurate pricing and LXRisk for real-time risk management.
FXCM Pro is the institutional arm of FXCM. The company has been providing wholesale execution and liquidity solutions since 1999, connecting clients with a strong network of Tier 1 banks, non-bank liquidity providers, prime brokers, and technology vendors.
One of the unique offerings from FXCM Pro is their Maker and Taker sessions that allow traders to access multiple execution venues, including Currenex, EBS, FastMatch, FX All, Hotspot, Integral OCX and SpotEX. This ensures a diverse range of liquidity options for efficient trade execution.
FXCM Pro also offers API access for professional and institutional users who want the ability to tailor pricing on a per instrument, per account basis, providing customisable and personalised trading experiences.
In addition to its liquidity solutions, FXCM Pro also offers a variety of technology tools, such as its proprietary trading platform, Trading Station, advanced charting packages, and automated trading software. The company also provides risk management tools and analytics to help clients make informed decisions about their trades.
Finalto, Playtech’s arm, is a leading global liquidity provider and prime broker, offering tailored multi-asset liquidity solutions for financial institutions and retail brokers since 2014. The company prides itself on its ability to create a diverse and deep liquidity pool by integrating well-known tier-1 institutions and ECNs.
The list of liquidity services offered by Finalto is extensive, covering FX, precious metals, base metals, single stock CFDs, index CFDs, cryptocurrencies and energies. This wide range of options allows clients to access over 800 instruments through a single cross-margined account.
Apart from liquidity services, Finalto also offers trading systems and CRM/back-office solutions to help brokers manage their operations efficiently and achieve maximum monetisation of customer order flow.
Finalto’s white-label solutions are another popular option for partners looking to enter the market quickly and easily. With a range of platforms that can be customised to fit individual needs, Finalto handles the technical and financial burden, allowing partners to focus on growing their business.
With a solid reputation built on reliability and transparency, Advanced Markets has been a go-to liquidity provision firm for over 15 years. They offer direct market access to one of the deepest pools of liquidity for Spot FX, Precious Metals and Energies.
One of the advantages of Advanced Markets is their unique offering of creating a custom trading environment by allowing clients to configure their own liquidity from a menu of providers. This, coupled with their high-end technology and real-time market data, gives traders an edge in the world of high-performance and algorithmic trading.
The company also boasts a virtual clearing network, fully integrated within their operating and credit infrastructures for live, executable multi-provider liquidity. Their platforms, Fortex 5 & 6, offer instant access to DMA liquidity with real-time reporting and the ability to customise trading strategies with their Algo X engine.
IXO Prime, the liquidity-providing service of Infinox, stands out with its personal touch and commitment to delivering the best execution for clients. The company taps into deep pools of liquidity from a range of sources, including Prime of Prime, Tier 1 Banks and other market participants.
IXO Prime uses advanced tools to match order types and flow types with the most competitive pricing available. Their wide range of liquidity sources enables clients to access the top players in the industry through a single relationship, achieving optimal execution and competitive terms across more than 900 instruments.
IXO Prime is built on global trading infrastructure and cutting-edge technology. Their white-label options for Metaquotes across MT4 and MT5 provide over 300 assets for clients to trade regularly in financial markets.
X Open Hub
X Open Hub is a leading liquidity provider that offers institutional-grade liquidity with one of the most impressive selections of financial products – more than 5,000 global instruments spanning Forex, digital assets, indices, commodities, shares and ETFs.
With spreads as low as $0.00001 and an average execution time of just 33 milliseconds, X Open Hub guarantees instant execution of traders’ orders. Their broad network of liquidity providers also ensures competitive turnover fees, giving partners a significant advantage in the market.
In addition to a wide range of financial instruments, X Open Hub offers multiple integration options via FIX protocol, API and MT4/MT5 bridge or gateway. They also have partnerships with top technology providers such as Prime XM, oneZero, Gold-I, and Tools for Brokers, allowing partners to integrate their solutions easily.
Why Choose a Reliable Liquidity Provider?
A reliable Forex liquidity provider ensures traders execute their orders without delays or price slippage. Here are some key reasons why you should choose a reliable partner for your liquidity:
- Instant Trade Execution: A trustworthy liquidity provider with abundant liquidity guarantees swift execution of buy and sell orders, enabling traders to seize market opportunities without any delays. This becomes paramount in a rapidly evolving market where time is of the essence.
- Low Fees: Liquidity providers at the top of their game offer competitive spreads and low transaction costs, enabling traders to optimise profits while keeping trading expenses to a minimum. This is particularly advantageous for active traders who engage in multiple trades daily, as even slight variations in fees and spreads can accumulate into substantial losses over time.
- Tight Slippage: Slippage can occur due to market delays or insufficient liquidity. A dependable liquidity provider mitigates slippage by upholding a robust order book and offering competitive bid/ask prices, thereby ensuring optimal trade execution for traders.
- Price Stability: Reliable connections to major institutions and liquidity pools help maintain stable prices. In volatile market conditions, where sudden price fluctuations can have adverse effects on traders’ positions, this can provide a critical advantage.
Factors to Consider When Choosing a Liquidity Provider
Let’s explore the key factors to consider when selecting the best liquidity provider for your business:
Trustworthiness and Regulation
Prior to entering into a partnership with a liquidity provider, it is of utmost importance to establish their credibility and adherence to regulations. Verify the provider’s regulatory status with a reputable authority and evaluate their financial stability and track record.
Range of Available Instruments
A trustworthy liquidity provider should provide a diverse selection of trading instruments, encompassing cryptocurrencies, Forex, commodities, indices, and stocks. Make sure that your provider can offer liquidity for the specific instruments you plan to trade. The presence of multi-asset liquidity and a robust order book are paramount for cultivating a varied trading portfolio.
Execution Speed and Quality
Look for a liquidity provider that offers fast execution speeds, preferably below 100 milliseconds, with minimal order rejects or requotes. The execution system should meet high standards, even during market data releases and unexpected events. Consider using automated trading software to assess the execution quality and gather feedback from current clients of the liquidity provider.
Evaluate their pricing, including spreads, commissions, and overnight fees. It is important to ensure that the pricing offered by the liquidity provider is competitive compared to other providers in the market. Additionally, verify if the provider charges swaps for futures-based instruments and whether they are transparent and fair with their terms and conditions.
Reliable Market Data Feeds
The feeds should reflect prices from interbank foreign exchange markets and major exchanges. Access to historical market data and tick data is crucial for analysis and decision-making. Additionally, the liquidity provider should provide a complete order book via FIX protocol or a trading terminal for transparency and convenience.
Reporting and Analytics
Consider the reporting packages provided by the liquidity provider. Look for features such as email reporting, full reconciliation reporting, closed and open trades reporting profitability reporting, and swap points reporting. The liquidity provider should offer comprehensive reporting tools to help you monitor and analyse your activities effectively.
Integration Options and Connections
Evaluate the integration options and connections offered by the liquidity provider. Look for connectivity via FIX protocol, MT4 bridge, MT5 bridge, or other reputable bridge providers. The liquidity provider should have a robust technology infrastructure that ensures seamless integration and data transmission. Additionally, consider if the liquidity provider offers multiple connection options and integrated Best Bid Offer (BBO) or iBBO models.
Liquidity Provider’s Reputation
Research the reputation of the liquidity provider in the market. Consider their track record, client testimonials, and reviews from industry experts. A reputable liquidity provider with a solid reputation is more likely to provide reliable and high-quality services. Seek recommendations from other crypto businesses and traders who have worked with the liquidity provider.
Support and Customer Service
Assess the level of support and customer service provided by the liquidity provider. Look for a provider that offers 24/7 support in multiple languages through email, phone, and chat. Prompt and reliable customer support is crucial, especially during critical trading situations or technical issues.
Remember to conduct thorough research, seek recommendations, and assess the track record of liquidity providers before making a final decision. By partnering with a reliable liquidity provider, you can ensure smooth trade execution and stable prices, thereby improving the overall trading experience for your clients.
Liquidity provider vs market maker – how do they differ?
A liquidity provider is a financial institution or company that supplies liquidity to the market by connecting a brokerage to the interbank market. The term is mainly used in the Forex trading industry.
On the other hand, a market maker is specifically responsible for building a market for specific securities by constantly providing quotes. They have an agreement or contract with the exchange or trading platform to fulfil this role. Essentially, market makers “make a market” for these securities, hence their name.
Overall, both liquidity providers and market makers play vital roles in maintaining a liquid market, and these two terms are often used interchangeably in the trading industry.
Who are liquidity providers in a decentralised crypto market?
A cryptocurrency liquidity provider, which is also known as LP, is usually an investor that provides crypto liquidity to liquidity pools in exchange for a reward. These pools support decentralised exchanges that allow users to trade cryptocurrencies without relying on a central authority.
How much does it cost to partner with a liquidity provider?
The cost of partnering with a liquidity provider can vary depending on factors such as the provider’s reputation, the range of instruments offered, execution speeds, and connectivity options. Some providers may charge a flat fee, while others may have a commission-based model.
Can I switch liquidity providers?
You can switch liquidity providers if you are not satisfied with the services or if your business needs change. However, switching providers may involve additional costs and technical integration, so it is important to plan accordingly.
Are there any risks involved in partnering with a liquidity provider Forex?
While partnering with a reputable liquidity provider can provide numerous benefits, there are some risks involved. These include counterparty risk, where the provider may default on their obligations, and technical or system failures that may disrupt trade execution.