Best Market Maker Forex Brokers

Market Maker Forex Broker in Currency Exchange

A big share of the foreign exchange trading companies is market makers and banks. The responsibilities of a market maker include both buying and selling from his or her client. Market makers are remunerated by selling similar products to different clients but at different prices. They also benefit from being able to allow assets to be purchased at stable prices, that is, by providing market liquidity which in turn boosts trade.

Market Maker Forex Broker in the stock exchange

Market makers whose trade involves buying and selling of stocks that are listed in an exchange are known as third market makers. Stock exchanges are characterized by prices that are in alignment with customers’ expectations and/or an order-driven market. In such a market, the flow of buying and selling is rather constant hence there is no designated liquidity provider. However, the market makers are still present.

The most important players in the foreign exchange market are non-banking financial institutions, retail traders, and banks. Retail traders, however, have limited financial power to directly take part in the interbank currency market. Nevertheless, there are two ways around this. Retail traders can be able to participate in interbank currency markets through market makers and electronic communication networks (ECN). But what exactly is the role of a market maker?

The role of a market maker

1. A market maker interminably purchases and sells a given currency at a price that has been quoted openly in the Over-The-Counter (OTC) market
2. Acting as a counter-party to a majority of the trades executed by retail traders, by continuously buying and selling currency at quoted prices in the OTC market.
3. Providing liquidity for traded stocks and assets and making a profit through it. How exactly does a market marker make his profits? A market maker trades against the people. By the action of a retail trader buying a currency, a market marker sells. The reverse is also true. A market maker benefits by getting a spread, which is the difference between a bid and a quoted price, which is entirely determined by demand and supply.
4. Facilitating prompt transaction of the quoted prices, that is maintaining an effortless flow of price movement.

Forex market maker regulations

The persistence of external factors that affect the liquidity of the foreign exchange market, the susceptibility of its participants to several trading frameworks, and their own experience have called for the need for market maker regulation. The regulations are aimed at:

1. Improving the market quality by formulating the duties of market makers and trading privileges that apply to market makers.
2. Avoiding self-generated market crises
3. Provision of a broader range of support for securities
4. Restraining trading activities that pose vulnerability to traders

Market making regulators

While several markets are making regulatory authorities globally. The focus will be directed on two regulators, namely Financial Industry Regulatory Authority (FINRA) and the Financial Conduct Authority (FCA).

Financial Industry Regulatory Authority (FINRA)

FINRA is a self-regulatory organization based in the US. It is one of the biggest financial regulatory bodies handling over 4,500 brokerage firms. To be able to run any firm, approval must be sought from FINRA. The body is a gateway all securities firms must pass to conduct business in the US.

FINRA implements regulations to protect investors and to ensure the markets function honestly. To do that, it enforces compliance with marketing and margin rules, pattern day trader requirements, and more. See below for full details of powers and regulations.

History

FINRA came to be on 26th July 2007 as a result of a merger between the National Association of Security Dealers and the New York Stock Exchange’s regulatory committee. The foundation aimed to cut costs and get rid of regulatory overlap, at the same time, safeguard the values of public investors, dealers, and brokers. The authority was initially identified as Securities Industry Regulatory Authority (SIRA).

The Role of the Financial Industry Regulatory Authority

1. Registration of members
2. Certification of members
3. Arbitration of members
4. Protection of investors
5. Ensuring fair and transparent practices
6. Research on issues that include cryptocurrency
7. Enforcement of advertising and trade reporting rules
8. Give guidance on how to handle and safeguard clients’ interests

Additionally, FINRA has the power to renew and disqualify licenses. It can also make inquiries, trace a firm’s historical data and request audits.

Key Rules & Regulations of FINRA regarding Market Makers

1. Best execution rule – The rule’s focus is on the protection of investors. It demands that broker-dealer transactions should be such that they mostly benefit the consumer.
2. Sustainability rule – The Suitability rule proposes that broker-dealers finalize private securities transactions in a way that only suits a specific individual and is in alignment with proper audits.
3. Pay-to-play rule – The objective of the rule is to manage the practices of FINRA members who participate in activities to recoup institutions that receive funding from the government. That is, regarding investment advisors. 
4. Taping rule – This rule intends to ensure that firms do not get to employ an excess of employees previously working in restrained brokers.
5. Outside business activity rule – The rule aims to safeguard the confidentiality of private securities transactions to avoid conflict of interest.

The Financial Conduct Authority (FCA)

The Financial Conduct Authority (FCA) is a financial regulatory organization that is based in the United Kingdom. It was founded to improve UK’s economy. It is a self-regulatory body that carries out its practices free of the government of the United Kingdom. Its finances are derived from fees paid by members of the financial services industry. FCA’s structure is that of a company limited by guarantee. This means that it does not have shareholders, but instead has members who act as guarantors. FCA is responsible for regulating financial firms that offer services to clients whilst upholding the integrity of the financial market in the UK. This also includes market makers.

The role of FCA

The duties of FCA encompass several players in the financial markets. The Financial Conduct Authority has the responsibility for the regulation of both wholesale and retail financial services firms.

1. The body ensures that clients are treated fairly
2. FCA fosters healthy competition and innovation
3. Oversee institutions in identifying potential risks early enough to come up with actions that minimize the risk
4. Registering new members
5. Safe-keeping public records
6. Collecting annual reports
7. Ensure that financial advisers give consumers a wide range of retail investment products
8. See to it that consumers are given impartial and unimpeded market reviews.

Factors to consider when choosing a market maker forex broker

Reliability

When choosing a market maker, it is vital to pay attention to whether the market maker is reliable or not. There are various indicators of the reliability of a market maker.

1. Fund withdrawal services that are prompt
2. The duration of the market maker in operation. A market maker is keen on safeguarding its reputation by maintaining the trust that clients have bestowed them.
3. A reliable market maker has to be regulated by a renowned regulator
4. High-quality services
5. Positive reviews from other traders can speak much about the reliability of the market maker

Profitable Trading Conditions

Profitable trading conditions are characterized by

1. Large leverage and low spreads. This way, you will be able to maximize profits and minimize the risks.
2. Quality order fills that are free of slippage and requote

Convenient Trading

 A good market maker should offer convenience in trading practices. This is achieved by

1. Application of technology in providing services and being able to provide the clients with extensive progressive training
2. A market maker should ensure that the trading tools it employs are user-friendly and convenient to heighten the trading experience. That includes payment systems, automatic withdrawal, and VPS hosting.
3. Having to bear big losses in the case that options that are not good are called and put.
4. Dishonesty on the broker's and traders' part, by compromising trading rates can be limiting and restricting to a market maker
5. The introduction of CFDs and Forex brokers has proven to be problematic. This is because the brokers have the power to make negotiations where they were initially unable to
6. A majority of reports about malpractices are associated with firms venturing into Over-The-Counter markets. These markets include binary options, CFDs, and Forex markets.
7. Difficulty in identifying scam dealings

Limitations of market making

1. Having to bear big losses in the case that options that are not good are called and put.
2. Dishonesty on the broker's and traders' part, by compromising trading rates can be limiting and restricting to a market maker
3. The introduction of CFDs and Forex brokers has proven to be problematic. This is because the brokers have the power to make negotiations where they were initially unable to
4. A majority of reports about malpractices are associated with firms venturing into Over-The-Counter markets. These markets include binary options, CFDs, and Forex markets.
5. Difficulty in identifying scam dealings

Popular market maker (MM) Forex brokers

AvaTrade

AvaTrade is a leading FX broker. It boasts a loyal client base of over 200,000 globally. A leading broker, with a global presence and over 200,000 trusting clients worldwide. AvaTrade is regulated in all the countries in that it has been used for trade. It is an award-winning FX broker and market maker, earning itself several awards which include Best Affiliates and Best Broker Awards.

To ensure customer satisfaction where none of them feels left out, AvaTrade has seen to it that customer support is offered in several languages. Also, clients are given personal attention, around-the-clock service, and extensive market knowledge.

To ensure the security and safety of the client’s financial assets, clients’ funds are kept in different accounts with advanced encryption to provide the clients with secure trading.

AvaTrade also avails automated trading platforms for advanced FX trade stocks CFDs, indices, and commodities just to mention a few.

12Trader

12Trader is a group that consists of the world’s best international experts in the financial market. They provide excellent services in futures contracts, stocks, and Forex trading. 12Trader also provides its clients with reliable customer support and training that has proven to give valuable experience in trading.

Abshire-Smith

Abshire-Smith is regulated by FCA. Abshire-Smith is a financial institution that is located in London. It provides itself with providing top-notch support to its clients. It ensures the security of the client’s assets by keeping their funds in segregated accounts. Also, it conducts business with utmost professionalism. Additionally, it offers its clients customized services that suit individual needs. Abshire-Smith vast experience in the financial markets equips it with the know-how that is required to navigate trading in this market.