New Zealand based brokerage FXOpen has partnered with Soft-FX to gain access to the software company’s    Liquidity   Liquidity Liquidity is at the core of every broker’s offering. It is a basic characteristic of every financial asset - be it a currency, stock, bond, commodity or real estate. The more liquid an asset is, the easier it is to sell and buy on the open market. Foreign exchange is considered to be the most liquid asset class.Brokers can source liquidity from a single or multiple source, thereby delivering to their clients enough market depth for their orders to get filled. The main characteristic of liquidity is its depth, which will determine how quickly and how big of an order can be executed via the trading platform.Understanding LiquidityLiquidity can be internal or external depending on the size and the book of the broker. Companies which are large enough and have material client flows consistently are creating their own liquidity pools from the order flow of their clients, thereby internalizing flows and saving on costs to send customer orders to the interbank market. By doing that however they are exposing themselves to carry the risk on the trade.Liquidity providers can be prime brokers, prime of primes, other brokers or the broker’s book itself. Traditionally brokers are split between internalizing flows and offloading trades of their clients to different liquidity providers.Generally, retail brokers and their clients prefer more liquid assets which lead to better fill rates and less slippage. When there is lack of liquidity on a certain market, slippage can occur - the order is executed at a price which is the closest available to the one requested by the client. Liquidity is at the core of every broker’s offering. It is a basic characteristic of every financial asset - be it a currency, stock, bond, commodity or real estate. The more liquid an asset is, the easier it is to sell and buy on the open market. Foreign exchange is considered to be the most liquid asset class.Brokers can source liquidity from a single or multiple source, thereby delivering to their clients enough market depth for their orders to get filled. The main characteristic of liquidity is its depth, which will determine how quickly and how big of an order can be executed via the trading platform.Understanding LiquidityLiquidity can be internal or external depending on the size and the book of the broker. Companies which are large enough and have material client flows consistently are creating their own liquidity pools from the order flow of their clients, thereby internalizing flows and saving on costs to send customer orders to the interbank market. By doing that however they are exposing themselves to carry the risk on the trade.Liquidity providers can be prime brokers, prime of primes, other brokers or the broker’s book itself. Traditionally brokers are split between internalizing flows and offloading trades of their clients to different liquidity providers.Generally, retail brokers and their clients prefer more liquid assets which lead to better fill rates and less slippage. When there is lack of liquidity on a certain market, slippage can occur - the order is executed at a price which is the closest available to the one requested by the client. Read this Term Aggregator to boost the company’s ECN MT4 solution. The broker is aiming at delivering better execution to its institutional client base by gaining access to more than 20    Liquidity Providers  Liquidity Providers A liquidity provider (LP) constitutes either individual and/or institution that functions as a market maker in a given asset class. Broadly speaking, liquidity providers will act as the both the buyer and seller of a particular asset, thus making a market. In the equities space, many stock exchanges rely on liquidity providers who make the commitment to provide liquidity in a given equity. These liquidity providers commit to providing liquidity in the hopes that they will be able to make a profit on the bid-ask spread.In doing so, these entities theoretically ensure greater price stability and also improve liquidity by making it easier for traders to buy and sell at any price level. Market liquidity providers also oversee an important service and take on a significant amount of risk.However, these are still able to profit from the spread or by positioning themselves on the basis of the valuable information available to them.Analyzing Liquidity Providers Relationship with BrokersIn addition, liquidity providers also delivering interbank market access to retail brokers. They are typically large multinational investment banks, or other financial institutions that can be non-bank entities. Each liquidity provider is streaming executable rates to the broker whose aggregator engine is selecting the best bid and ask and streams it to clients to deliver the best possible spread.The broker is the direct counterparty to all trades executed with the liquidity provider and typically only uses them to offload flows which it finds uneconomical to internalize. That said, some brokers are sending all of their flow to liquidity providers.Liquidity providers have a set of characteristics which are determining their suitability and reliability - such are order rejection rates, spreads, and latency. Brokers which aren’t monitoring the flow adequately are risking to deliver to their clients’ bad fills, which consequently result in customer complaints since the customer is consistently not getting the displayed or requested price. A liquidity provider (LP) constitutes either individual and/or institution that functions as a market maker in a given asset class. Broadly speaking, liquidity providers will act as the both the buyer and seller of a particular asset, thus making a market. In the equities space, many stock exchanges rely on liquidity providers who make the commitment to provide liquidity in a given equity. These liquidity providers commit to providing liquidity in the hopes that they will be able to make a profit on the bid-ask spread.In doing so, these entities theoretically ensure greater price stability and also improve liquidity by making it easier for traders to buy and sell at any price level. Market liquidity providers also oversee an important service and take on a significant amount of risk.However, these are still able to profit from the spread or by positioning themselves on the basis of the valuable information available to them.Analyzing Liquidity Providers Relationship with BrokersIn addition, liquidity providers also delivering interbank market access to retail brokers. They are typically large multinational investment banks, or other financial institutions that can be non-bank entities. Each liquidity provider is streaming executable rates to the broker whose aggregator engine is selecting the best bid and ask and streams it to clients to deliver the best possible spread.The broker is the direct counterparty to all trades executed with the liquidity provider and typically only uses them to offload flows which it finds uneconomical to internalize. That said, some brokers are sending all of their flow to liquidity providers.Liquidity providers have a set of characteristics which are determining their suitability and reliability - such are order rejection rates, spreads, and latency. Brokers which aren’t monitoring the flow adequately are risking to deliver to their clients’ bad fills, which consequently result in customer complaints since the customer is consistently not getting the displayed or requested price. Read this Term, amongst them LMAX, Saxo Bank and Citi.

Other companies which are using the Soft-FX Liquidity Aggregator are recently launched Middle Eastern prime brokerage Fortress Prime and UK based RVD Markets. Soft-FX has specifically developed its solution to meet the needs of organizations in managing liquidity from various external and internal sources.

"Brokerage companies willing to enter the next phase of their evolution should be able to satisfy the need of institutional clients with our Liquidity Aggregator. It is the right tool for that,” said Soft-FX’s CEO, Max Faust.

The Liquidity Aggregator solution delivered by Soft FX is implemented in C++ which delivers very high performance. The clearing accounts opened with liquidity providers are connected to the Aggregator via an API, and each account has a unique portal within the Liquidity Aggregator.

Market depth data from each LP is combined with the current liquidity from the broker’s own clients, which leads to lower spreads and increases liquidity by combining the volumes on offer from different LPs.

The director of FX Open NZ Ltd., Denis Pegyanov, shared in the announcement, "The acquisition of Soft-FX Aggregator is a milestone in the FXOpen evolution. It enables the company to achieve a higher level of partnerships and to occupy better positions in the industry due to expansion of its target audience.”