b2broker
This is crucial to trading floor liquidity regardless of its type. The liquidity bridge allows traders to receive quotes and liquidity without the significant involvement of the broker through end-to-end processing technology. The liquidity bridge also helps brokers. Two types of liquidity bridges correspond to technologies ECN and STP. On the one hand, it provides a better quality of trade; on the other hand, it reduces the risks of the brokerage company.
ECN liquidity bridges connect traders and financial institutions from across the globe, increasing turnover, allowing 24-hour trading, and improving execution speed and spread. Because private traders are becoming more interested in trading and because of enhanced openness, this approach, which puts orders from all traders on the market, is progressive. Transparency is transaction volume and price, not counterparty identity. All transactions are via the ECN system.
ECN network is an alternative trading system since it does not utilise exchange or OTC market makers.
STP (Straight Through Processing) is a liquidity bridge that lets brokerages deliver customers’ orders to banks that trade directly on the interbank market. Most traders like this approach since traders have direct access to the market and can execute without a dealer. More liquidity providers improve client execution.
Direct client-liquidity provider communication is STP liquidity bridge’s core feature. The supplier combines several liquidity sources, increasing liquidity and pricing. STP provides floating or fixed spreads. Large banks supply liquidity with a predetermined spread, but the aggregator may pick the best pricing from all sell and purchase bids. Zero or negative spreads might result.
ECN liquidity bridges enable client-to-client trading. In this situation, the broker offers a platform where banks, market-makers, and individual traders may trade directly, resulting in better prices than utilizing external counterparties. With adequate liquidity, it eliminates trade delays, allowing near-perfect execution.
Since traders don’t have to worry about others interfering with their trading, STP liquidity bridges eliminate human mistakes, delays, and expenses. Since STP liquidity bridges buy prices from several market players, they increase liquidity. A brokerage business with one quotation source cannot deliver better execution, narrower trading spreads, or more accurate quotes.
