Retail Liquidity Provider (RLP): everything you need to know

It is well known in the Forex world all that a Retail Liquidity Provider (RLP) implies; however, do you know what this type of mechanics means and how it works?
If you have any doubts, you can clarify them with us, Smart Broker Solutions; we are a tool provider to become a broker or improve your work as a Forex Broker.
Now, why should you be interested in this topic? Because the RLP allows different types of investors, investment banks, and brokers, like you, to be the counterparty to buy and sell orders from their retail clients. Let’s see the objective of this way of working as a Broker.

What does Retail Liquidity Provider (RLP) mean?

RLP, the Retail Liquidity Provider, is a business model that provides the market with greater liquidity and better cost conditions to create the necessary liquidity so that clients, who have in their broker and operate under this mechanism, can invest with sufficient liquidity in the markets.
Knowing a little of the context, we can say that this instrument was born in the framework of a market consultation protocol to develop better capital market regulation, specifically in Brazil.
What we want to achieve with the Retail Liquidity Provider is to encourage individual investors assisted by banks and brokers to trade and increase these investments in the market.

What characterizes the RLP?

One of the features of the Retail Liquidity Provider is that it is intended for investors focused on the best proposals and trading requests for US dollar mini futures “WDO,” stocks, or those interested in Ibovespa mini futures “WIN.”
The fascinating thing about all this is that RLP allows you, as a Money manager who manages a broker, to act as a counterparty in negotiations, thus promoting more favorable liquidity conditions for retail or individual investor operations with an attractive price.

How do liquidity providers work?

The variations for investors operating in Brazil are not relevant from an operational point of view; however, some peculiarities are worth noting. Firstly, operations through the Retail Liquidity Provider take advantage of the broker’s counterparty.
Thus, for the client to have access to RLP’s dividends, they must adhere to the model and authorize you, as their broker, to make the offers through the RLP instrument.
What happens next is that transactions have the power to operate internally with the client portfolio. Following a step-by-step procedure, it is executed in this way:

  • As a Broker you make an available offer.
  • Your client (the investor) makes known their intention to buy or sell the amount they deem appropriate.
  • The price must be the most favorable available in the market to be attractive.
  • For example, when trading USD mini-futures contracts, your client can choose stocks that stand out and represent an opportunity.
  • Otherwise, they must at least be similar to the order book. 

What actions allow you to trade from the Retail Liquidity Provider? As a Broker, you promote a dynamic flow of buying and selling operations for your clients.

How many liquidity providers are there?

Each broker that does not have a trading desk has several liquidity providers, without neglecting those who keep working with one of them above the others.
This feature provides your broker with tighter spreads depending on the time of the market. As for the number of these liquidity providers, we can name here the ten most important ones valued for their seriousness and trajectory:

  • Deutsche Bank.
  • RBS.
  • UBS.
  • Nomura.
  • Goldman Sachs.
  • Barclays.
  • Morgan Stanley.
  • Commerz Bank.
  • Credit Suisse.
  • BNP Paribas.

What is the largest provider of liquidity?

To work with a retail liquidity provider, you may want to know the biggest provider worldwide. The answer focuses on the large investment banks of the globe, many of them in Europe, for example, in the United Kingdom.
At SBS, we rely on highly competitive UK liquidity providers (regulated by the FCA) as part of our liquidity connection services for your broker. They have world-class services in forex, indices, commodities, cryptocurrencies and equities instruments worldwide.

Other liquidity solutions on SBS

Thanks to this service that Smart Broker Solutions offers you, as  part of our great offer in tools for Brokers, you can obtain the benefits of the liquidity connection with regulated providers such as those in the United Kingdom, with advantages that you cannot miss, including:

  • Reliable and stable online trading experience.
  • Real-time valuations of multiple instruments.
  • Technological tools with advanced technical analysis.
  • Connection with the latest market events, news and reports.

The liquidity service that we propose from Smart Broker Solutions gives you the prerogative to work from your limits and risk.
You can decide whether to work in one of two ways: either as part of the operation as a reserve B or whether you prefer to leave all transactions and risk to the supplier, which is called STP.
With our liquidity services, you can work with LATAM currencies, think about investments in the Latin American market.
Check today our Liquidity services in Smart Brokers Solutions and get all the advantages of owning a broker, provided with expert advice, solid and reliable suppliers and satisfied customers.

Rodrigo Insua

Avatar of Rodrigo Insua

Head of Marketing en Smartbrokersolutions. Coordination and management of online and offline marketing campaigns.