FX: Brokers cannot afford an identity crisis
The recent withdrawal of Stater Global Markets from the prime-of-prime broker market has underlined the need for providers to continue to prove their value to clients.
Aggregated pricing streams are preferable to single bank lines for most FX trading clients.
Non-bank price-makers have become more influential during the past few years and for most clients a prime-of-prime (PoP) broker is the only way to get access to this important liquidity source.
Stater Global Markets’ June 3 announcement confirming it was ceasing its PoP offering referred to the difficulties of competing with larger rivals, even for a business with a substantial client base and a strong management team.
While the firm says its decision was prompted by the refusal of investor SBL Holdings to put any more money into the business, providers are coming under increasing pressure from clients who want to know they are getting better access to liquidity.
According to IS Prime managing partner Jonathan Brewer, many PoPs actively market themselves as “true prime of prime”, positioning themselves solely as a credit intermediary that gives a client access directly to tier-1 liquidity and even the chance to communicate directly with liquidity providers.