What Issues Can Aggregated Pricing Cause For Brokers?
Fintech Focus TV
Timeframe
00:00 - 00:33
Section
Introduction
The problem with aggregated liquidity when prices changes
If there’s a sweep in the market, rates will change
If you have 20 LPs, varying in quality there will be a delay in updating the rate
The top of book rate will update much slower
A lot of business is being done through sweeps
This widens the gap between the rate for the previous bid and new offer, creating a perfect opportunity for abritrage
00:33 - 02:50
02:50 - 04:00
How long has this been happening?
The banks have been experiencing these issue for the last 20 years
In retail, for a long time spreads were wide enough to be unaffected
Now EURUSD spreads are choice 60% of the time
Any delay in updating the rate presents an arbitrage opportunity
Slippage or rejects can be one form of defense
How has it impacted retail brokers?
Some brokers have Increased volume of business, but reduced profitability
More predatory clients targeting brokers with weak pricing
Clients are no longer just ‘clickers’, there are very sophisticated groups working together to extract value
04:00 - 04:56
