🏦 Brokers·advanced

Liquidity Provider

Also called: lp, prime broker

A bank or institution that provides buy and sell quotes to brokers — the wholesale source of forex prices and fills.

A liquidity provider (LP) is a big bank, hedge fund, or financial institution that provides buy and sell quotes directly to forex brokers. These quotes become the prices retail traders see on their broker platforms. Major LPs include Citibank, JPMorgan, UBS, Deutsche Bank, HSBC, Barclays, and Goldman Sachs — the top tier of the interbank FX market. Brokers that use LPs (ECN and STP brokers) aggregate prices from multiple providers to get the best available bid and ask at any moment. If Citi's offer is 1.0950 and JPMorgan's offer is 1.0949, the broker shows 1.0949 to the client. This competition between LPs gives retail traders access to near-interbank pricing. Market maker brokers don't necessarily use LPs in the same way — they can internalize trades first and only hedge with LPs when their exposure gets too large. The transparency of LP-backed pricing is one of the reasons pros prefer ECN/STP brokers.

Real trade example

IC Markets publicly discloses that it aggregates liquidity from 25+ providers including major banks — this is why its EUR/USD spreads regularly drop below 0.2 pips during active sessions.

Related terms

ECN Broker

intermediate

A broker that routes orders directly to a network of liquidity providers without taking the other side — no conflict of interest.

STP Broker

intermediate

A broker that routes orders straight through to liquidity providers without dealer intervention — similar to ECN but less transparent.

Broker

beginner

The company that gives you access to the forex market — the middleman between you and the currency you want to trade.

Liquidity

intermediate

How easily you can buy or sell an asset without moving its price — high liquidity means tight spreads and instant fills.

Spread

beginner

The difference between the buy (ask) and sell (bid) price — your cost of entering a trade.

A-Book

advanced

A broker model where client trades are routed directly to external liquidity providers — the broker just passes through orders for commission.

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