How to choose a liquidity bridge: 7 things to consider

Author: Ivan Egorov

One of the first things that a broker needs to think about when starting a business is a liquidity bridge. Some say it is the heart and soul of brokerage, and it can make or break your success. Technology has become an integral part of any business today, and it is especially true with a brokerage. That’s why before committing to one liquidity bridge or the other, it is vital to make a proper evaluation of the options that you have.

At TFB, we have developed our own bridge — Trade Processor — and naturally, we have learnt a lot about clients’ decision-making along the way. In this article, we’ve compiled a list of universal criteria that we believe would help brokers of any size make a balanced and informed decision when choosing the liquidity bridge software.

Below are the 7 points we highly recommend including into your evaluation:

1. Company background

The bridge will be a keystone of your trading infrastructure, so the company that provides you the bridge must be a trusted and reliable organization that has a proven record of satisfied clients and partners.

Normally, it should not be a problem to find all that information on the company’s website. Who are their clients? Are they similar to you? Where is the company based? Do they have 24/7 tech support and proper user guides available?

If you cannot find much of the information online, but the product looks too appealing to you to pass on, don’t be shy about asking those questions to the sales reps that you are working with.

2. Stability and safety

The next step for you would be a trial on your demo server. Sometimes brokers skip it, expecting the product to work right out of the box.

However, sometimes there is a problem with how the product integrates into the existing environment, how it is compatible with other solutions you’re using on the server.

As the saying goes — better safe than sorry. It will only take a couple of days to run a few quick tests, which is definitely better than finding yourself with no budget left, and the solution that doesn’t suit your needs and requirements.

3. Performance and speed of the bridge

Every company on the market wants to provide its clients with the fastest possible trades execution and data feed. How do we check and measure it? One way would be to use your stopwatch for it. Yet, it will be almost impossible to measure it manually, as the average trade execution time is just a few milliseconds.

Don’t hesitate to ask the technology provider to reveal average trades execution time results, taking an average number of trades you need to execute per second into consideration.

4. How many liquidities does bridge support?

As a business, you do not want to lock yourself into the product that doesn’t give you flexibility. Make sure the bridging solution that you are evaluating has a connection to all required liquidity providers. It should also give you room to add new connections once you need it.

5. Additional tools and features

Liquidity bridges today offer more or less similar functionality. Still, it is best to never assume that the product will do everything you need it to do.

Does it have the necessary aggregation types and reporting capabilities? Will you be able to monitor exposure and manage risks? Arrange a brainstorming session with your colleagues, think through and write down all the ‘must’ and ‘nice to have’ features to later apply during your evaluation.

6. Technical Support

No matter how well-designed the software is, you are likely to have some technical questions or issues along the way. It goes without saying that 24/7 access to technical help is a must in the brokerage world.

Before making a purchase, do proper research. Learn more about the technical support, their skills and SLAs, how eager they are to engage, what means of communication they use, and how fast they reply.

In the business where every minute plays a huge role, you cannot afford to wait a day or two before you get your problem solved.

7. Pricing

Last but not least, take the time to look into pricing and contract drafts to make sure there are no hidden charges.

Ask about the minimum monthly fee and trading volumes, how much would it cost to connect multiple liquidity providers or provide liquidity to other brokers. Always check if there are any package offers, special promos, and other goodies.

We are hoping that this list will help you make a smarter decision when purchasing a liquidity bridge. If you are looking for a solution right now, please give our Trade Processor bridge a try. Send us a request at sales@tfb.com, and we will get back to you shortly.