Should Brokers Depend on Only One Liquidity Provider?

In this article, Jonathan Brewer describes the advantages of a Prime of Prime solution as the sole liquidity provider. I am not a supporter of using this business model, as I think that only in conditions of healthy competition can we find optimal solutions both in business and in life. I think that a business model with one liquidity provider is suitable only for a limited group of Forex brokers. I’ll explain my position below…

First of all, I would like to distinguish two main groups of retail brokers:

1. Brokers who largely operate as market makers (MM), i.e. act as a counterparty for client transactions.

2. Brokers who provide access to interbank liquidity, that is, act as an intermediary for client positions.

Of course, nowadays the line between the two is blurred. Continue reading “Should Brokers Depend on Only One Liquidity Provider?”

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