Slippage Absorption: Control What Your Clients See

Slippage Absorption: Control What Your Clients See

When a client places a large order, it gets matched across multiple layers of liquidity. The client receives a volume-weighted average price, and depending on market depth, that price may differ from what they requested. This is slippage, and it happens on every execution venue.

The question for brokers is not whether slippage occurs. It is who absorbs it, how much of it, and under what conditions.

Slippage Absorption gives brokers granular control over this at the execution level, configurable per symbol, per group, and per account.

How it works:

The system calculates slippage on raw prices before any markups are applied, so markup changes are never misidentified as slippage. Brokers then set tiered absorption rules based on pip magnitude.

For example, a broker might configure:

• Up to 1 pip of slippage: 100% absorbed. The client sees no slippage at all.
• Up to 5 pips: 50% absorbed. The broker splits the difference.
• Up to 10 pips: 10% absorbed. The client bears most of it.
• Above 10 pips: passed through fully.

This tiered approach lets brokers protect client experience on routine small slippage without taking on unlimited liability during extreme moves.

Positive, negative, or both:

Each absorption rule specifies which direction of slippage to handle.

Negative slippage means the client receives a worse price than requested. A broker absorbing negative slippage is taking on that cost to protect the client from unfavourable fills. This is a common configuration for VIP segments or high-value accounts where execution quality directly affects retention.

Positive slippage means the market moved in the client's favour between order placement and execution. A broker capturing positive slippage retains that price improvement as additional revenue rather than passing it through. This is a revenue tool, and it works without affecting the client's requested price.

Brokers can also configure both directions simultaneously with different absorption rates per tier. For example, absorb 100% of negative slippage under 2 pips to protect clients, while capturing 80% of positive slippage across all tiers as revenue.

Configuration and priority:

Rules are set per symbol, per group, and per account. Account-level overrides take priority over group defaults, so brokers can run broad policies across client segments while applying custom rules to specific accounts.

Brokers can also set a maximum absorption volume in lots, capping exposure on any single rule, and choose whether absorption applies to market orders.

How it fits into execution:

The feature is built directly into the bridge execution path. The order of operations is:

1. Slippage is calculated on raw prices (before any markups)

2. Absorption is applied to adjust the raw price

3. All markups (spread, price band, target spread) are applied on top of the adjusted price

No separate plugin, no additional infrastructure is required. Configuration is handled through the existing admin interface.

Want to see how it works in practice?

Book a demo with the Your Bourse team and we will walk through slippage absorption configuration for your setup.

Best Regards,

Your Bourse Team