Choosing a liquidity provider is one of the three decisions that define your brokerage's economics — and it's the one founders spend the least time on, because every LP sales deck looks identical. Tight spreads, deep liquidity, great support. Here's how to see through the deck.
·Headline spreads are marketing. Effective cost is real.
The spread on the pricing sheet is the best case on a quiet Tuesday. What you actually pay is spread plus commission plus markup plus slippage, weighted by when your clients actually trade — which for retail flow means news events and volatile opens. Ask every candidate for historical spread data and execution reports across volatile sessions, not averages. A provider who won't share them is answering your question.
·Ask about last look — in writing
Last look is the LP's right to reject or requote your order after seeing it. Some window is normal in FX; an undisclosed or long window is how brokers end up with reject spikes exactly when clients trade most. Get the last-look policy in writing, ask for reject rates in normal and volatile markets, and prefer firm pricing where your flow justifies it.
·The checklist we run for clients
- Fill rates and reject rates by symbol and order size, in calm and volatile conditions
- Real market depth — and whether aggregation across multiple LPs is available
- Regulatory status and the actual legal entity you'd face as counterparty
- MT5 / Match-Trader bridge support, FIX API quality, hosting locations, named escalation contacts
- Instrument coverage that matches your offering: FX, metals, indices, crypto CFDs
- Minimum deposit, monthly volume commitments, termination and migration rights
·New brokers: prime-of-prime is the honest starting point
Direct tier-1 liquidity requires capital and volumes a new brokerage doesn't have. A good prime-of-prime gives you aggregated institutional pricing at realistic commitments. The trap is signing volume minimums priced for the broker you hope to be in year two — we renegotiate these constantly for clients who signed alone.
·Where we come in
We work with the LPs and bridge providers in this market daily, know the real market price of everything, and negotiate terms as part of every launch. If you have quotes on the table, send them over — we'll tell you in one call whether the terms are good. WhatsApp us; the review costs nothing.