In the world of forex trading, the majority of global liquidity is provided by a number of big-name investment banks with big forex departments and commercial banking, also known as the Tier 1 liquidity providers.
Liquidity providers make the market smoother and robust to handle high trade volumes. In financial markets, liquidity providers are generally “market makers,” who hold a substantial amount of a financial asset.
Hence, it brings price stability to the markets, by ensuring proper distribution of these assets to both retail and institutional investors.
At Doo Clearing, we combine aggregated, Tier-1 liquidity with advanced technology and connectivity to provide you with superior Prime Services.
What is Tier 1 Liquidity Providers?
Tier 1 liquidity providers are massive, transnational banks such as Deutsche Bank, Morgan Stanley, UBS, Barclays, Societe Generale, Credit Suisse, etc.
These banks provide price quotes for all currency pairs that are traded across the market over an electronic communications network (ECN). It is also determined the prices of liquidity, establishing the market for forex brokers and traders.
Tier 1 liquidity providers make their money from the difference between their buy and sell prices and not by trading as counterparties. Commissions on the buy and sell sides of the trades are also a second source of income for liquidity providers.
An individual trader is not able to get direct access to a Tier 1 liquidity provider. Their access to the forex market will be provided by an online forex broker who tend to use at least some Tier 1 liquidity providers to fill most of their orders and will normally access an ECN/STP network to execute trades.
Why Tier 1 Liquidity Providers?
Forex brokers usually connect to several liquidity providers to obtain better dealing rates and spreads. In doing so, they can offer their customers the best price obtainable from multiple liquidity providers.
Doo Clearing aggregate prices across numbers of tier one bank liquidity providers, for a fully aggregated market depth.
We make the process smooth and hassle-free for brokerages, fund managers and other institutional traders.
Additionally, our liquidity solution is designed for institutional and high-volume traders looking for easy and quick access to institutional FX and CFDs.
Contact a specialist today for an insightful preview of how we can bring your brokerage to the next level.
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