Ensuring Transparency in Liquidity Provision

The 2008-2009 financial crisis ushered a new era for financial services, regulatory compliance and liquidity provision. Nothing was ever going to be the same. The Basel III rules set forth by the Basel Committee on Bank Supervision (BCBS) laid the groundwork for a fairer and more transparent financial services ecosystem fueled by regulated liquidity provision.

Promoting a capital conservation approach aimed at increasing the financial sector’s resilience during periods of economic downturn, the rules raise the standards for liquidity provision. To meet these standards, both bank and non-bank liquidity providers must adhere to strict regulatory norms drawn up by the regulators in their countries.

How does regulated liquidity provision benefit brokers?

The importance of regulation in liquidity provision is immense. Although its benefits are not immediately obvious to traders, as the end-beneficiaries of liquidity, regulatory oversight provides stability and transparency in terms of pricing and distribution.

But liquidity provision is a three-way road. On the institutional side, enhanced transparency on liquidity distribution and pricing equates with trustworthiness and better brand positioning. A regulated liquidity provider implicitly lends credibility to FX and CFD brokerage firms, giving them a competitive edge.

The key benefits of regulated liquidity provision go a long way. Not only do regulated liquidity providers such as X Open Hub provide market participants with sufficient resources to execute orders, they also ensure market integrity and efficiency.

By sourcing liquidity from a regulated liquidity provider, brokers gain access to more markets, can effectively broaden their order books, and offer better trading conditions (e.g., tighter spreads, depth of market, post-trade transparency, and lower transaction costs).

Empowering brokers with regulated liquidity provision

Entering the liquidity space in 2012, X Open Hub has earned a reputation for providing enterprise-grade liquidity solutions to the FX and OTC financial services industry. With an impressive track record of offering liquidity and cutting-edge liquidity solutions to brokers, banks, and hedge funds worldwide, X Open Hub empowers financial industry players through regulated liquidity.

Listed by the Warsaw Stock Exchange (WSE), the company is subject to stringent regulatory oversight across multiple jurisdictions, within and outside the EU area. In line with these requirements, X Open Hub abides by rigorous reporting and governance rules, strengthening its commitment to transparency and stability in the financial industry.

Brokers partnering up with X Open Hub gain access to a trusted multi-asset regulated liquidity  source, vetted by several top-tier regulators, including:

• The Cyprus Securities and Exchange Commission (CySEC): CySEC is one of the most prominent regulatory authorities in Europe. Its duty is to oversee the activities of financial institutions operating in Cyprus as well as Europe-wide, ensuring their risk portfolios and operations comply with its norms which reflect the ESMA’s MiFID II and MiCA directives.  With its CySEC licence no. 169/12, X Open Hub is one of the most respected liquidity providers in Europe.

• The Financial Conduct Authority (FCA):  The UK’s FCA is yet another top-ranked financial oversight body for operators in the financial services sector in the UK and Europe. Placing investors first, the FCA is committed to safeguarding the integrity and fund safety of market participants. The FCA regulates the activity of publicly listed financial firms, with a keen focus on consistency, transaction legality, and lending services. As an FCA-regulated liquidity provider, with licence no. FRN522157, X Open Hub is regarded as a highly reliable source of multi-asset liquidity.

• Komisja Nadzoru Finansowego (KNF) : Poland’s financial regulator KNF supervises the activities of financial industry players, including banks, insurance companies, pension funds, cooperative banks, capital, and payment service providers. X Open Hub also provides its services in accordance with the KNF’s rules of transparency and integrity, as reflected by its licence no.

• The Financial Services Commission in Belize (FSC): The FSC provides a comprehensive cross-border framework for financial service provision to ensure the stability and legality of such operations carried out in Belize as well as worldwide. Its rules and regulations suit the profile and services of most reliable and trustworthy financial service providers globally. Licensed by the FSC under licence no. 000302/11, X Open Hub has a solid global foothold in the liquidity services sector, connecting brokers with top-tier liquidity pools.

• The Dubai Financial Services Authority (DFSA): Dubai’s regulatory authority sets a standard for financial activities in the thriving emirate. Its main activities are centred on risk management and enforcing strict actions to prevent abuse and fraud. Licensed by the DFSA under licence no. F006316, through its Dubai entity, XTB MENA Limited, X Open Hub is well represented in the Middle East and Africa, acting as a trusted liquidity provider for financial firms in the region.

• The Seychelles Financial Services Authorities (FSA): With a broad framework for financial activities, the regulator ensures that financial institutions adhere to the latest compliance and anti-money laundering (AML) norms applicable to non-bank undertakings in the Seychelles as well as internationally. Addressing the liquidity needs of numerous bank and non-bank financial organisations, X Open Hub holds an FSA licence (no. ), which reinforces its global position.

• The Financial Sector Conduct Authority (FSCA) of South Africa: The FSCA counts among one of the most sought-after licences for brokers and prop firms. Enforcing strict measures regarding equitable customer treatment, transparency, trade reporting and fund safety, the regulator plays a pivotal role in ensuring the efficiency of financial service operations in South Africa. Obtaining its FSCA licence in 2021, through its parent company, XTB Group, X Open Hub expands its outreach on a global scale.

Passported to 20+ jurisdictions, these licences are a testament to the company’s commitment to transparency and excellence in liquidity management and distribution.

X Open Hub is not only a trusted source of regulated multi-asset liquidity for brokers, prop firms, and hedge funds, it also facilitates cost-effective product diversification across 5,000+ OTC instruments.

To explore the company’s rich liquidity offering, visit the website.