Weighing Tier-1 Prime Brokers' Competitiveness

It is difficult for a tier-1 prime broker or bank to be competitive in the FX space because they do not cater to smaller market players, essentially restricting themselves from that market flow. Therefore, regardless of the fact that major banks are able to take huge volume, they do not have the capability to provide Liquidity Liquidity The term liquidity refers to the process, speed, and ease of which a given asset or security can be converted into cash. Notably, liquidity surmises a retention in market price, with the most liquid assets representing cash.The most liquid asset of all is cash itself.· In economics, liquidity is defined by how efficiently and quickly an asset can be converted into usable cash without materially affecting its market price. · Nothing is more liquid than cash, while other assets represent The term liquidity refers to the process, speed, and ease of which a given asset or security can be converted into cash. Notably, liquidity surmises a retention in market price, with the most liquid assets representing cash.The most liquid asset of all is cash itself.· In economics, liquidity is defined by how efficiently and quickly an asset can be converted into usable cash without materially affecting its market price. · Nothing is more liquid than cash, while other assets represent Read this Term the way prime of prime, and exchanges do.

Economies of Scale

Only these market players have the incentive of aggregating prices into a best bid best offer feed, which provides quality in depth of market, and makes it easier to fill orders. The Tier 1 Prime brokers do have a major benefit though, which is cost savings through economies of scale; however, the benefits of these cost savings are typically only reaped by larger firms.