Read all about Liquidity provider, how they are important for markets and Crypto Liquidity Provider in India
What is Liquidity?
Liquidity is the ease with which you can liquidate (sell) your assets in the minimum possible time. Let us take an example – you have a land as investment option and then some crypto assets or stocks as another investment option. Now you want money quickly, which asset can you sell easily and quickly? You guessed correctly. Crypto assets or stocks are easier to liquidate than the land. Therefore, crypto assets are highly liquid than real estate.
Crypto assets are highly volatile and in absence of liquidity, they become more so. Few of the establish ones are doing good on the markets, they have high volume and lots of investors are investing in those. Still, many of the new and even establish ones’ struggle to gain volume and attract investors. This affects their liquidity and low liquidity even causes slippage which further scares away potential investors.
High liquidity leads to easier buying or selling and more realistic market prices therefore liquidity is important for well-functioning crypto market.
What is a Liquidity Provider?
Liquidity Provider is a firm which works as market maker for an asset or exchange. They quote both buy and sell prices and make profit on the bid-ask spread. A liquidity provider can be a broker or institution or even specialist firm where they work on both sides of a transaction.
When you log onto a market and place a buy or sell order. A liquidity provider provides you with the necessary stocks from their own reserves thereby ensuring liquidity throughout the market.
Factors to consider while choosing a Liquidity Provider in India
Liquidity providers are very important and they should be chosen with utmost care and due diligence. There is risk of market manipulation from the wrong parties therefore always check their portfolio and quality of services before hiring a liquidity provider for your asset/exchange. Here is a checklist on what to look for when hiring a liquidity provider.
- Liquidity Service – Check what the services the firm is offering. This includes the type of liquidity provided, multiple assets or single crypto liquidity, access to real-time and historical data etc.
- Swift Execution – Their trade executions should be swift with re-quotes and slippage as this makes huge impact in highly volatile markets.
- Stability – The stability of Liquidity provider is also an important factor. What is the experience of the firm, its reputation and proven partnerships are some factors one should look when hiring.
- Support – Check which type of support the LP is offering. Are they available in technical glitches or you have to run around getting answers?
- Data and Price feeds – These should be fast, without delays to avoid mismatches or gaps. Their servers should be nearest to financial markets to provide lowest latency.
- Reporting Requirements – The firm should provide trade reports, swaps and rollover reports, FIX bridge reporting and order book access.
The bottom Line
It is best to do research and check for all the above-mentioned features to find the best crypto liquidity provider in India. PlatinX Technology is one of the leading crypto liquidity provider in India. They offer liquidity enhancement and market making as well as customized crypto solutions. Their PTX Algo trading software is making waves in the crypto industry and helping arbitrageurs and brokers alike.
PlatinX Technology fulfills all the features mentioned in the checklist written above. Currently they are providing Liqudity for exchanges as well as new and established crypto assets.