For FX liquidity buyers, fewer providers mean better execution
As consumers’ understanding of best execution evolves, “quality over quantity” becomes buy-side mantra
For years, liquidity consumers seeking best execution in the foreign exchange market would put as many liquidity providers in competition with each other as possible via multi-dealer platforms or aggregators. The rationale was that the more LPs there were competing against one another, the tighter the spread would be for the consumer.
But thanks to greater availability and quality of transaction cost analysis (TCA), that logic is increasingly being disproven. TCAs show that being connected to
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