Higher liquidity is a factor important for any market participant: it drives the spreads down, and hence the cost of trading goes down too.
The role of liquidity providers on forex is to provide interbank liquidity access and to bring together lots of brokerages and individual traders to increase the liquidity of the market. Liquidity providers are often large banks and other financial institutions. At present, forex trading recognizes Deutsche Bank as the world’s largest liquidity provider. Deutsche Bank is also known as a key investment and retail bank.
Forex liquidity providers, along with market makers, aim at lowering volatility on the market, providing uninterrupted transactions and optimal price policy, and supporting the volume of transactions.
Straight-through processing (STP) brokers are particularly active in interaction with liquidity providers to improve their own announced liquidity and rates.
Knowing the best liquidity providers of the present day gives better understanding on ‘who is who’ on the forex market.