Episode 04: Prime of Prime Liquidity in Focus

This guide will introduce the role of Prime of Prime (PoP) liquidity in forex and multi-asset trading. We will discuss its critical components, from how it is regulated, to the essential role it plays in helping to ensure flawless trading in today's often volatile financial markets. iSAM Securities¹ is well positioned in the market as a global PoP liquidity provider, regulated by the FCA, SFC, CFTC, and CIMA registered.

What is Prime of Prime Liquidity?

A Prime of Prime (PoP) acts as an intermediary allowing clients, such as retail brokers and smaller institutions, to access large liquidity pools from major tier 1 banks. PoPs also aggregate liquidity from multiple sources, while traditional brokers usually gain liquidity from one source. The Prime of Prime structure opens liquidity up to a larger public audience, offering it to clients who may not be able to directly engage with Tier 1 institutions due to not meeting specific capital or infrastructure requirements.

Often, clients also seek additional value that is not offered by regular retail brokers. For example, iSAM Securities also provides:

Execution speeds with average fill times under 10ms
Global presence across London, Hong Kong, Florida, Cayman and Dubai
Real-time analytics tools such as iSAM Securities Radar

Key Client Segments for Prime of Prime Services

Prime of Prime providers aim to support smaller institutional and professional trading firms by providing them with institutional grade liquidity that they may not be able to access otherwise. These clients include:

Proprietary trading firms
Retail or smaller-sized brokers
Hedge funds and Fintech companies
Asset managers
High-net-worth individuals
Family offices

What Is Multi-Asset Trading?

Multi-asset trading, as the name suggests, is the practice of trading in multiple assets, such as forex, indices, and digital currencies. There can be many reasons for traders to multi-asset trade, with five common ones being:

Diversification: Spreading risk across multiple assets and reducing dependence on a single market mitigates exposure
Optimise returns: Investing in various assets simultaneously could increase chances of receiving the best returns
Manage volatility: Multi-asset strategies allow traders to hedge against volatility during times of crisis, such as conflict or geopolitical uncertainty
Flexibility: Traders do not become stuck in a particular market by avoiding overexposure to a single asset class

Why Is Prime of Prime Critical For Institutional Trading?

PoP providers aid institutional trading by enhancing market access, risk management, and efficiency, allowing small to mid-sized firms to operate competitively in global markets. Key PoP Offerings:

Access to tiered liquidity that would otherwise not be available to smaller institutions
Margin trading capabilities that increase clients’ capital efficiency
Often significantly lower costs compared to that of Tier 1 banks and institutions
Innovative technological solutions and analytics
Strict adherence to regulatory compliance
Stability during uncertain times and volatility

How does Technology Influence PoP Liquidity?

Technology is essential for effective PoP liquidity, enabling lightning-fast execution, competitive pricing, improved risk management, and integration with trading platforms.

Tighten Spreads: PoP technology enables traders to efficiently analyse multiple price feeds even in volatile market conditions, helping to maintain tighter and more consistent spreads.

Low Latency Execution: Companies like iSAM Securities, with co-located servers, enable swift and efficient trade execution.

Platform Integration: PoP providers offer flexible integration with popular platforms such as MT4/5 or custom API connectivity to meet individual clients needs.

Risk Management: The advancement of technologies, such as iSAM Securites Radar, allows for advanced market monitoring. This risk analytics platform equips traders with powerful data-driven insights.

Global Reach: By utilising ultra-secure cloud infrastructure and global offices, many (PoP) provide worldwide reach across all time zones.

Why Partner With iSAM For PoP Liquidity?

iSAM Securities is an established Prime of Prime liquidity provider, trusted by institutional clients globally.

Regulated by FCA, SFC, CFTC, and CIMA registered, increasing security and trust
Low-latency execution with servers co-located in London and New York
Multi-asset liquidity across FX and precious metals, and index swaps
Proprietary risk analytics tool, iSAM Securities Radar, offering real-time risk analytics
Client-centric onboarding and 24/5.5 support

If you’re a hedge fund, broker, asset manager, proprietary trading firm or a family office looking to gain access to institutional-grade liquidity, be sure to get in touch!

¹ iSAM Securities (UK) Limited, iSAM Securities (HK) Limited and iSAM Securities (Global) Limited, iSAM Securities Limited and iSAM Securities (USA) Inc. are together “iSAM Securities”.