A matter of pedigree - Finding the right CFD Liquidity providers to grow your business

Nicholas Pratt sets out to discover what are the key attributes of leading CFD liquidity providers and what are their clients looking for.

First Published: e-Forex Magazine 77 / FX Brokerage Operations / September, 2017

The growing popularity of the contracts for difference (CFD) market is bringing with it new participants from both a retail and institutional background, including both trading firms and individuals as well as intermediate brokers. While it welcomes new players and embraces new technology such as API connectivity, there are aspects of the CFD market which remain stubbornly traditional, such as its predominantly over-the-counter (OTC) nature, which runs contrary to the general regulatory trend to encourage more central clearing. Some parties have tried to change this. For example, in 2007 the Australian Stock Exchange attempted to introduce exchange-based clearing but in 2014 it had to admit defeat and wound up its offering citing a lack of interest from the market.  The flow of new entrants to the market allied to its decentralised and OTC nature mean that there is a strong reliance on liquidity providers, of which there are a growing number. So what characteristics should these intermediate...continued

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