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May 09, 2023 - Finalto Group is proud to announce the release of a new Liquidity Whitepaper as another stellar addition to the Finalto Brokerage Series. This whitepaper, along with the Finalto Broker Series as a whole, aims to inform and exemplify brokerage best practice as Finalto continues to be a global leader in the sector.
Chief Analyst, Neil Wilson, explains: “The idea of the Finalto Brokerage Series is to highlight and detail the wealth and depth of experience and knowledge we have acquired through many years of business working with multiple brokers. Over time we’ve developed best practice principles that we think should be shared and adopted wherever possible.”
In this whitepaper we highlight the most important factors to be considered when choosing a liquidity provider. At Finalto, bespoke and sustainable pricing is a top priority.
"Liquidity provision is all about providing a price. But liquidity provision is not a one-size-fits-all model," says Wilson. "Increasingly, clients are looking for tailored liquidity that serves their needs whilst retaining access to a large, secure, and respected liquidity provider."
One of the ways Finalto achieves bespoke pricing is by narrowing spreads for clients. Skewed price feeds are important as they allow Finalto to provide a Bid/Offer that is as close to mid as possible. Finalto can accomplish this by pooling multiple sources of liquidity and aggregating it to meet individual clients' needs. Finalto also emphasizes the importance of tailoring its solution to the specific needs of clients. "Tailoring our solution is modelled on a range of factors and will depend on trade size and the type of client," says Andy Biggs, Group Head of Risk and Trading at Finalto. Biggs adds, "This is where our creation and careful management of deep and dynamic liquidity pools, and the technological development to support them, has been instrumental in being able to service the needs of a wide range of clients."
Another key element centres around robust and continuing feedback loops as an essential part of the process. Finalto creates different pools reflecting the variety of client needs to place the flow in the right pool, preventing an LP from pulling or widening pricing. We place a high level of importance on setting clients on the right path. "The pricing model has to be suitable for the client from the beginning in order for it to be a sustainable solution," adds Wilson. Finalto is continually striving to provide the most sustainable pricing to clients based on constant influxes of new data. "By sustainable pricing, we refer not only to market depth but also to the resilience to market corrections and dislocations," explains Wilson. Therefore, it is incredibly important to consider a liquidity provider's adaptability and longevity.
Finalto's approach to liquidity provision is based on best practices that have been developed over years of experience in the industry. Whitepapers such as this one and the Finalto Broker Series aim to help clients make informed decisions when choosing a liquidity provider. "We understand that different clients will require different things from their liquidity provider," says Wilson. "A retail broker seeking to split A book and B book clients trading predominantly FX and CFD equity indices does not have the same requirements as a macro or multi-strategy hedge fund. And a macro hedge fund does not have the same requirements as a traditional long-short equity fund."
Finalto's commitment to bespoke, sustainable pricing and its emphasis on tailoring its solution to clients' needs make it a top choice for those seeking a liquidity provider. We hope that with the aid of the Liquidity Whitepaper and the Finalto Broker Series, clients can rest assured that they are making an informed decision when choosing Finalto as their liquidity provider.
To read more about best practice when choosing a liquidity provider, click HERE.
