Forex liquidity and risk management from MT5 Open

If your company provides or plans to provide financial market trading services to individual clients and you are interested in ensuring high quality of your product, you will need liquidity. MT5 Open works with trusted liquidity providers that can ensure best prices and perfect executions. Let us know what kind of model you are planning to start: A-Book or B-Book? We will be glad to help you make the best choice with the highest benefits for your business. Even if you think that A-Book model doesn’t fit your company, just get a consultation from UpTrader legal team to find out how A-Book can save a lot of money for B-Book brokers.

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What is liquidity?

Liquidity is a term commonly used in markets to describe the ease with which assets can be converted into cash. Liquidity is important for all traded assets and is one of the most important factors in making trade profitable. More liquidity in the markets means an easier flow of transactions, resulting in more competitive prices. Therefore, providing liquidity is a key factor for the proper functioning of asset markets.

What Forex liquidity does for brokers

You set your own spreads

There are several ways you can stand out on the fintech market: high quality of service, advanced technologies, or great trading conditions. With crypto and Forex liquidity, you will be able to attract clients with tight spreads. Set your own spreads to suit your business model.

Unlimited number of instruments

Offer as many instruments for trading as you want: CFDs on stocks, indices, commodities, currency, cryptocurrency, metals. This will appeal to a broader audience and diversify trading risks.

Single liquidity flow from multiple sources

Provide high Forex and crypto liquidity to your clients so that every order is met with a matching request.

Uninterrupted liquidity flow

Risks of an interrupted flow are diversified thanks to the simultaneous supply of liquidity from multiple sources.

Does a small broker need liquidity?

The short answer is yes, any broker would benefit from liquidity. The B-book, while attractive at first glance, carries a lot of risk, while the A-book may not seem a very profitable model. We, on the other hand, believe that the hybrid model is the optimal choice. In this article, we have detailed the pros and cons of each model and how to work with them.

What is a liquidity provider?

A liquidity provider is an intermediary company who supplies you with the bid and ask price of a traded asset with the intention of generating a profit from the commission on the trades. Liquidity providers allow buyers and sellers to trade easily without the need to find other individual traders, making the assets liquid.

The higher the liquidity, the quicker and better trade orders are executed, the happier your clients are. The provider of liquidity can be either a market broker or an institution that acts as a professional market maker on both sides of the trade.

How to choose a liquidity provider?

The provider you choose should be reliable and honest and have a good reputation. You should also keep in mind that liquidity providers are divided into tier 1, tier 2 and so on. Direct access to tier 1 providers, that is, Prime Brokers, can only be obtained after you pass their compliance.

Normally, it requires a license and white-list jurisdiction. In all other cases, it is worth choosing amongst the intermediaries.

MT5 Open offers

  • Filtering and selecting quotes and orders
  • Technical support
  • Forming your own Forex liquidity
  • STP and ECN technologies
  • Crypto liquidity
  • Trusted forex and crypto liquidity providers
  • Bridge, API, Gate for MT4/MT5 and other platforms

Payment methods

With Forex liquidity from MT5 Open, every broker can count on the high quality of services provided to their clients thanks to the flexible conditions.
Any convenient method can be used to pay for your services.

Cryptocurrencies

Online payment

Wire transfers

Bank cards

What can you get in a package with MT5 WL from MT5 Open

  • Unify quotes from various sources into one flow
  • Route orders to Forex liquidity providers
  • Lower spreads
  • Get the best possible order execution
  • Diversify risks connected to Forex liquidity providers
.

Automatic transition of trades to the interbank market

MT5 Open model allows brokers to immediately move clients between A-book and B-book without a server reboot.
Fully avoiding a financial collision between the company and the clients.

Immediate order execution: 30,000 orders per second

Flexible settings for trading conditions (markups, commissions, etc.)

Setting priorities between price and execution

Automatic trade transition to the interbank market

Choose your own Forex liquidity aggregation model

  • Get ECN with trading platforms and terminals
  • Client transfer between books with open orders
  • A-book/B-book/Hybrid model
  • Partial client hedging
  • Online client position monitoring and automatic transfer between books according to predetermined rules
  • Get reliable Forex and crypto liquidity providers
  • Hedge clients with minimum trade volume
  • Execution on VWAP prices in B- and C-books
  • Quotes filtration based on the LP priority system
  • Floating or pre-close leverage for MT4/MT5
  • Automated load balancer
  • Volatility Protection for MT4/MT5
  • Setting up a broker’s own functionality and implementing individual business logic

MT5 Open will support you in connecting to any of your own Forex or crypto liquidity providers

  • All trades are executed on a dedicated liquidity server
  • Connecting the liquidity feed to any trading platform
  • Flexible regulation available for trading conditions and markups
  • STP and ECN technologies
  • Seamless Forex liquidity provision: tested by top brokers
Forex Majors

EUR/USD, GBP/JPY, and 26 more

Metals

Gold, Silver, and 5 more

Energies

Brent crude oil, WTI crude oil, Natural gas

Indices

S&P 500, Dow Jones 30, and 10 more

Cryptocurrency

BTC/USD, ETH/USD, and 30 more

CFD US Shares

AAPL (Apple Inc.), TSLA (Tesla Inc), and 147 more

CFD EUR Shares

BNP (BNP Paribas SA), BMW (Bayerische Motoren Werke AG), and 49 more

CFD Asia Shares

Tencent, Mitsubishi, and 44 more

Сhecklist of things to look out for when assessing your specific needs

Liquidity package

One of the most important things a broker should look for in a liquidity provider is the liquidity package, that is, what assets and what liquidity are provided.

Nominal accounts in different currencies are a plus, as is the ability to accept all leading stable tokens and cryptocurrencies for deposits and withdrawals. These are just some of the aspects to consider, but it is important to make sure that your specific needs are fully met.

MT5 Open can help you find liquidity with a wide range of instruments, including Forex, crypto, spot metals, indices, shares, bonds, and futures. It is of utmost importance that the liquidity provider gives you access to multi-asset liquidity along with historical data.

Fast execution

It goes without saying that the liquidity provider should offer the fastest possible execution of trades with requotes or slippage.

This is very important at the time when market news can have a strong impact.

Market depth

Most liquidity providers use this aspect as a key selling argument. Market depth is indeed a key factor as it gives an indication of liquidity and depth for a particular currency, for example.

The greater the number of bid and ask orders at a particular price, the greater the market depth.

Pricing

This is another key aspect and one of the main aspects that companies would look at when searching for a liquidity provider.

Liquidity provider pricing should include competitive spreads, not to mention low commissions and swaps without compromise on either side.

Data flows

The liquidity provider must be able to provide reliable and stable client data flows.

Price flows should reflect real-time prices obtained from all relevant exchanges and the Forex interbank market. Delays in providing price data are likely to result in gaps.

Reporting requirements

Reporting is vital for optimal operations. The liquidity provider must be able to deliver an automated and reliable reporting system, which will also enable your compliance with regulatory requirements.

Report types to look for are trade reports, FIX bridge reports, swap and rollover reports, and order book access.

Customer service

The image of any company can be undermined if the customer support team is slow to react, responds unprofessionally and takes a long time to resolve client problems.

Therefore, it is important to get an impression of how the company communicates with you and how interested the company is in helping you in particular.

Price

It is not always worth chasing after popular liquidity providers as they often offer higher prices for the same and sometimes even lower quality service, charging a premium for their name. It is the service that counts for your clients.

Therefore, when choosing a provider, focus on their professionalism.

Get more information - contact us!