Liquidity Provider – How to Create Professional Platform

A quality brokerage company that wants to start a cryptocurrency business needs to choose professional liquidity providers. It is one of the main components of quality platforms that allows you to achieve success in the Forex market and gain trust in the eyes of users. The platform uses the liquidity aggregator for various purposes: access to the Forex market, conducting crypto payments, connecting an order book, etc. Let’s talk about the main functions and role of a liquidity provider.

Basic LP Features

The point of liquidity providers is that they are so-called “third parties”. These are special intermediaries who provide high-quality and reliable communication between brokers and market makers (large exchanges, large banks, etc.). Of course, a broker can also carry out a direct relationship. But this is only possible in the case of very large transactions. And trading companies may not always meet these conditions.

Therefore, brokers who decide to create a crypto exchange prefer to cooperate with liquidity providers. These platforms provide connectivity with major financial institutions and charge a commission. The amount of the payment depends on the volume of the transaction and the company with which you need to conclude an agreement.

Main Steps, How to Become an LP

A company that is thinking about how to start a forex business faces some organizational issues. For example, the need to obtain a license. All high-quality brokers work only with qualified and certified liquidity providers. The most popular countries for obtaining a license are Belize, Saint Vincent and the Grenadines, Vanuatu (weak regulation) or Cyprus, Malta, Estonia (strong regulation).

The next step after registration and obtaining a license is LP contracts. A professional LP should liaise with tier 1 banks and large hash funds. Also, chat with Pop brokers and liquidity pools. The more partners and participants in the pool you have, the better.

The situation is similar in other markets. For example, you are partnering with brokers who decide to create a cryptocurrency exchange. In this case, you need to be a quality cryptocurrency liquidity provider. It is necessary to sign contracts with other exchanges, investment funds, banks, and financial regulators. This approach allows you to form a good pool of liquidity and become a reliable LP.

Selection of Quality Technologies

It is obvious that suppliers cannot work with brokers without high-quality technologies and White Label crypto exchange software. An important step is the choice of reliable innovative software that meets modern requirements. The software must guarantee a high level of protection and be responsible for the high-quality process of interaction between sites and first-level market makers.

One of the main points is the introduction of a high-speed way of processing transactions. Quality liquidity providers can process 10,000 or more transactions every second. The introduction of an advanced white label cryptocurrency exchange software and work with innovative programs will create a high-quality platform and ensure success.

In addition, many liquidity providers are actively using other important technologies. For example, the FIX API connector allows you to open access to new markets and attract new partners. The more possibilities LP offers, the better.

Terms and Agreement with Platforms

So now you have created a legal liquidity provider and are ready to partner with brokerage platforms. It is important to offer forex prime brokers the most favorable and transparent conditions. The partners need to understand how and how much a liquidity provider earns. The commission must be clearly indicated and there must be no hidden fees. Create a clear and transparent contract that benefits both parties. Having a competent and high-quality agreement without additional commissions will increase your trust rating.