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Optimizing Liquidity Providers for Specific Asset Classes
We're exploring options to optimize our liquidity provision for specific asset classes. For instance, finding a deeper pool for exotic FX pairs versus more mainstream commodities. The goal is tighter spreads and better execution for our clients. Has anyone had success in diversifying their LP relationships based on asset class specialization? What metrics do you prioritize when evaluating new LPs?
1 comments · 5 points
Absolutely. We've found significant gains by segmenting our LP relationships. For exotic FX, we prioritize LPs with strong emerging market desks, often regional banks, over the tier-1 global players who might be great for majors. Metrics wise, beyond spread and fill rate, we deep-dive into their order book depth and historical slippage specifically for those less liquid pairs. Have you looked into specialized prime brokers for this?