What Are FX Liquidity Providers?
This article is written by Bracket When your business executes foreign exchange (FX) transactions, the quality of your rate depends on more than just market conditions. Often it hinges on your FX liquidity provider. These entities supply the market with buy and sell quotes, allowing you to execute trades at competitive prices. Definition and role of liquidity providers the FX market FX liquidity providers are typically large banks, financial institutions, or firms that constantly quote bid and ask prices. Their role is to ensure that counterparties can transact in the FX market without significant delays or price gaps. Primary vs secondary liquidity sources Primary liquidity providers Tier-1 banks with direct access to interbank markets. Secondary liquidity providers Brokers or aggregators that source rates from multiple primary providers. For most corporates, the right choice is often an aggregator that blends multiple feeds, reducing exposure to price spikes. Why choosing the right FX liquidity provider matters Selecting the best FX liquidity provider isn’t just about rates, it’s about long-term cost efficiency, risk management, and operational stability. This can change a lot business-to-business. Impact on transaction costs Even a 5–10 basis point difference in spreads can translate into six-figure annual savings for companies with large FX exposures. Transparent pricing models help CFOs identify, and avoid hidden FX fees and markups. Companies can use tools like an FX Benchmarker to check their rates and understand what costs are being incurred. Risk management benefits A reliable liquidity provider can: Understanding the true cost of FX by benchmarking What is FX benchmark? An FX benchmark is a reference rate used to measure the competitiveness of your FX deals. Examples include the WM/Refinitiv rates or central bank reference rates. How benchmarks can reveal hidden spreads By comparing your trade execution prices to a benchmark, you can identify if you experience consistently wide spreads, and any additional markups beyond agreed fees. This providers CFOs and Treasury leaders opportunities for renegotiation. Recently a European airline discovered their provider was adding a 0.25% spread to EUR/USD trades, costing them £250,000 annually. Benchmarking revealed the gap, and they secured a better deal within a month. How to compare liquidity providers Pricing transparency The best place to start is from asking your provider for: Our tip: Avoid providers unwilling to show how their rates stack against independent FX benchmarks. Technology and execution speed Execution delays can cost money. Leading providers offer: Regulatory compliance Only work with providers regulated in reputable jurisdictions (e.g., FCA in the UK). This reduces counterparty risk and ensures better dispute resolution. Common pitfalls avoid when selecting FX liquidity providers How a CFO Saved €280k in FX costs A leader in live video technology, faced challenges in managing FX operations. Romain Pirenne lacked visibility on pricing applied by banks and brokers, making it difficult to assess and compare FX margins charged on FX Forwards and FX Options with no visibility on provider profits. By using a Benchmarking tool, he was able to: The power of benchmarking tools are undeniable, as Romain Pirenne explains, “We now have full visibility on margins applied by our FX providers and have drastically cut our costs. The transparency and efficiency it provides have been game-changing for our treasury operations.” For CFOs seeking to unlock similar savings, the right benchmarking tools can turn hidden costs into measurable gains. Key questions to ask your FX liquidity provider Also Read Join our Treasury Community Treasury Mastermind is a community of professionals working in treasury management or those interested in learning more about various topics related to treasury management, including cash management, foreign exchange management, and payments. To register and connect with Treasury professionals, click [HERE] or fill out the form below to get more information. Notice: JavaScript is required for this content.
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The supply chain process: Step by step
This article is written by our partner, SAP Taulia The supply chain process influences how effectively you manage costs, mitigate risks, and meet customer expectations. Learn how to optimize each stage here. A guide to the supply chain process An effective and efficient supply chain is vital to the success of any business. It contributes significantly to overall financial health, increases resilience against adverse conditions, and plays a vital role in ensuring products are delivered on time to customers. By focusing on improving their supply chain processes, businesses can improve product quality, avoid inventory shortages or oversupply, increase customer satisfaction, protect against supply chain risks, and reduce costs. Stages of the supply chain A supply chain represents the flow of goods, materials, and services that underpin business operations, from sourcing raw materials to delivering finished goods. Each business has its own supply chain and is responsible for constructing and managing it to suit its unique objectives. Involving suppliers, manufacturers, distributors, and customers, the supply chain process can be broken down into the following stages: 0. Establishing the supply chain One of the most important steps in the supply chain process comes before it’s up and running. That step is planning and establishing a supply chain that is finely tuned to your specific business needs, the sector you operate in, and the market you serve. During this step, you first need to decide on supply chain objectives and specify the metrics that will be used to monitor progress toward them. Then, move on to build your supply chain to suit those metrics. This includes supplier sourcing – the process of choosing suppliers to fulfil your need for goods and materials while also considering how well they serve your specific aims. At this initial stage, you can also consider how to achieve visibility over inventory flowing through the supply chain, and determine how you’ll integrate other technological processes like cash flow and demand forecasting. 1. Purchasing materials/goods With the sourcing of suppliers complete and the foundation of your supply chain well established, the supply chain process proper begins with purchasing raw materials and components. The purchasing process formalizes the way in which a company buys goods and services, meaning that spending can be carefully managed and tracked. By having guidelines in place for every part of their purchasing process, from negotiating contracts to approving purchase requests, companies can ensure that their purchasing practices match their business objectives while increasing efficiency and minimizing risk. 2. Manufacturing and inventory management The manufacturing process involves taking purchased raw materials and components and developing them into finished products. Although some manufacturing processes can be straightforward, modern manufacturing may include several steps that require products to pass through different facilities at various stages of completion. At this stage, the priority is to make sure that the materials or components supplied meet the required standards. Rigorous measurement of supplier performance, in terms of order fulfillment rates, price accuracy, and quality of goods, act as metrics to assess them against. It’s also increasingly common to track the flow of goods and materials throughout these steps, to facilitate inventory visibility. When complete, the final products must then be stored, so they’re ready for distribution to customers. Different options are available for this, each with their own pros and cons. The balance to be struck is between the cost of holding inventory and the speed with which you can fulfil orders. Using inventory management techniques to oversee both raw materials and finished products, you can take steps to optimize stock levels and improve how well your inventory warehousing and product delivery process serves your business objectives. 3. Delivering products to customers The distribution process involves the movement of finished products from storage to the end customer. Success here revolves around moving the right products, in the right quantity, on time, and to the correct location – all while managing costs. Depending on your business goals and the market in which you operate, you can either deliver products directly to customers or distribute them indirectly through partners or third parties such as agents, wholesalers, or retailers. Choices made at this stage of the supply chain process influence inventory cycle times and costs. Choosing the right distribution partners and tools can both drive efficiency and increase customer satisfaction levels. 4. Processing returns Inevitably, there will be occasions when customers return products. When goods are returned, they need to be checked to see if they meet the criteria for returns and refunds. They are either repackaged for resale or disposed of, with the relevant data entered into an inventory system. Refunds should be issued as quickly as possible, as customer relationships can be severely damaged if this process is mishandled. A smooth process, on the other hand, can strengthen customer relationships. Optimizing your supply chain process The supply chain process is a dynamic part of business operations, each stage of which can be optimized and refined to bring about efficiency. These are some of the most viable methods for improving the way your supply chain operates. Choosing the right supply chain model First and foremost, it’s essential that you adopt a supply chain model that fits both your unique objectives and the sector in which you operate. The main dichotomy in supply chain models is between lean and resilient. Lean supply chains seek to eliminate unnecessary expenditure, turning raw materials into finished goods with minimal waste and loss. Resilient supply chains are designed to adapt quickly to unanticipated events by holding safety stock and having a degree of supplier redundancy built in. The former approach is geared to ‘just-in-time’ inventory practices, and the latter ‘just-in-case’. The lean approach relies on all the supply chain steps functioning almost perfectly. Without safety stock, disruption from a single supplier could cause production to halt almost immediately. On the other hand, a resilient approach will come with greater storage costs and a greater risk of obsolescence while tying up more cash. Refining your approach to supply chain…