Liquidity bridge and large volume trading

Author: Alexey Kutsenko

Modern trading leaves no room for delays, errors, or issues. Expectations are high, and brokers and hedge funds feel immense daily pressure to keep up with the top-quality services. And the more volume you process, the greater your responsibility.

Large volumes require enterprise solutions, with technology playing a significant role in the game. In particular, the choice of liquidity bridge directly influences how many trades a broker can process, at what speed and price, and how satisfied their clients will be afterward.

Today, we will dive deeper into the role of the liquidity bridge in large volume trading and the functionality that supports brokers with their growth and success.

Behind the scenes

The backend technology that is the key to success is often overlooked and outshined by the customer-facing tools.

The foundation of the solutions we use is a great example of that. If your software demonstrates excellent performance with 100 traders and XYZ volumes, this doesn't necessarily equate to great performance with 1000 traders and significantly higher volumes. How much workload your bridge can handle is far more important than we'd like to think.

Besides the bridge's architecture, supportive functionality like built-in backup can play a crucial role. In Trade Processor, a Backup LP functionality instantly switches to an alternative Liquidity Provider if the primary LP becomes non-responsive, allowing trading to continue uninterrupted.

Transparency and flexibility

Any broker, especially one with large volumes, wants to have insight into and influence on the internal processes. Without access to or knowledge of what's happening within the liquidity bridge, brokers and hedge funds cannot gain momentum and adjust their settings and configuration to protect traders and maximise their revenues.

Trade Processor has no central panel, meaning each bridge installation is different and can be customised to accommodate unique needs. For example, through setting the routing rules or creating client groups.

On another note, third-party integrations play a huge role in keeping brokers and hedge funds flexible. As your company grows, working with solutions that do not support integrations becomes a risk. At TFB, we also offer FIX APIs that allow integrations with any solution our clients like.

Execution as a growth instrument

Execution is the center of any liquidity bridge, and the way it's implemented has long-lasting effects on the company's operations.

The key to success is to find a liquidity bridge that offers advanced options. Here is how Trade Processor works, as an example:

• Access to private aggregation pools with a wide variety of trusted LP partners with TFB, allowing clients to decide who they want to work with.
• Multiple aggregation modes for the best pricing in all circumstances.
• A continuous execution option for large orders that helps execute them with higher pricing than would typically be accessible.
• Volume consolidation to make the end of the day easier (and avoid errors) with automated order consolidation.

Supportive ecosystem

Something that's not a part of the bridge itself but is equally important is the ecosystem of solutions that support and enhance the bridge.

Third-party integrations are great, but they don't always work as planned, and compatibility can become an issue. With native solutions, all developed and tested by the bridge provider, a quick rollout and easy use are guaranteed.

Trade Processor's functionality is currently expanded and supported by:

• TFB PAMM for custom money management
• Business Intelligence for data reporting
• TFB Plugins that target specific individual needs