Each liquidity provider delivers the indicative purchase and sale prices to the bank or brokerage firm through a direct flow. The company then selects the best purchase and sale price, which results in the best spread available.
Another important function of liquidity providers and market makers, is that they try to reduce market volatility so that supply and demand occurs without interruption. Thus, sometimes increasing the volume of transactions that are launched on the market.
These institutions earn money because they charge a differential to their customers. Sometimes instead of a spread, especially in pairs like EUR-USD, what is charged is an amount per volume of transactions with the spread being zero. That is why many traders prefer to operate with brokers without negotiating, since your operations go directly to the market through these liquidity operators, who have no interest in losing or winning in the operation, they will also earn money.
Prominent Liquidity Providers of the World
- Goldman Sachs
- Credit Suisse
- BNP Paribas
- Bank of TokyoMitsubishi UFJ
- Bank of America
- JP Morgan Chase
These liquidity providers form an essential and dominant portion of the Forex market since they drive supply and demand which can reduce price quotes to the benefit of trading clients. At Tradeview, we partner with more than 50 liquidity providers that make it possible for us to provide the tightest spreads in the market.
Business Development Manager – Tradeview