STARPRIME Completes Beta Testing of Market-Maker Model for Retail Brokers
Institutional liquidity solutions provider STARPRIME has completed a beta-testing phase for its Market-Maker Model. The company tested the model with a select number of clients. The product will address some of the main challenges faced by larger retail brokers. STARPRIME focused on improving the efficiency of externalising Non-Risk Flow and addressing the Non-Risk Revenue dilemma.
Externalised Flow
Retail brokers often seek liquidity from traditional providers such as Tier-1 liquidity providers, ECNs and banks. However, these solutions can come with wider spreads and higher margins than the retail model allows. As a result, externalising flow can become commercially difficult. Brokers may then need to manage more market exposure and risk.
STARPRIME's Market-Maker Model addresses this gap. It lets clients trade using pricing and margins more in tune with the retail model. Under the model, the market maker manages the difference between retail-aligned pricing and LP pricing. It absorbs this differential through internal netting across aggregated flow and by using scale.
Non-Risk Revenue Dilemma
Retail brokers have also seen changes in their revenue streams over recent years. Non-Risk Revenue has increasingly converged with risk revenue. STARPRIME attributes part of this change to retail clients becoming more informed. Developing trading skills and technology, including AI, can help retail clients become more profitable and preserve their capital during flammable market conditions.
During the beta testing, some participants identified client segments where Non-Risk Revenue was close to or higher than risk revenue. It creates an Expected Value Trade-Off for brokers. The potential revenue from these clients may be limited to their Non-Risk Revenue. Potential losses can be much higher.
Brokers can manage their market risk and identify potential revenue opportunities in these client segments by externalising this flow through the Market-Maker Model.
Market-Maker Model vs STP Solutions
STARPRIME also compared the Market-Maker Model with STP solutions on a like-for-like basis. The company observed potential advantages across several core metrics. The Market-Maker Model provided faster price updates and tighter spreads, especially during combustible market conditions. Also, it delivered more efficient order fills, particularly for larger order sizes.
STARPRIME also observed significantly lower market impact. It added to greater overall execution efficiency. The company noted that these results can vary depending on the underlying order flow. However, it also observed clear improvements even with sharper flow.
What Executive Said
Jay Mawji, CEO of STARPRIME, highlighted the growing pressure created by the industry's "Race to Zero." His comments point to the focus on lower trading costs and tighter pricing across the industry. According to Mawji, STARPRIME's market-maker solution can support this trend by applying consistent pricing across the flow it accepts.
The model lets STARPRIME offer execution costs closer to the retail model than a traditional LP relationship may offer. Mawji also sees this as a way to encourage stronger competition and continued improvements in pricing across the industry.
About STARPRIME
STARPRIME is an institutional liquidity provider and CFD market maker. It serves brokers, hedge funds, and fintech companies. The company specializes in multi-asset liquidity, risk management, and trading technology. STARPRIME offers deep liquidity across forex, metals, indices, commodities, and cryptocurrencies. Also, it provides market making, liquidity aggregation, low-latency execution, API integrations, and AI-powered pricing and risk management tools.
Wrapping Up
STARPRIME has completed beta testing of its Market-Maker Model with selected clients. The testing will improve flow externalisation, manage market risk, and address changing revenue dynamics.
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