Prime of Primes vs Prime Brokers: Which One is Suitable For Your Brokerage Business

Low entry barriers, advanced technologies, and uninterrupted internet connectivity, these aspects contributed to the growth of financial markets, making brokerage services more viable. Add to that, users became more aware of making money through investing in Forex and other securities, increasing the demand for access to these markets.

These factors made operating a brokerage firm more challenging, especially for mid-size businesses that face competition from market whales and key players. This tendency led to the foundation of prime brokers and prime of prime brokerage that connected operators to financial markets. 

Let’s find out the difference between PBs and PoPs and the right model that fits your brokerage platform.

Who are Prime Brokers?

Prime brokerage is a business model that allocates significant resources to serve large financial institutions, investment banks, hedge funds and other leading market players.

These services extend from executing trading orders to more complicated responsibilities, such as market research, financial analysis, expert consultancy, asset management, and more.

Forex prime brokers harness years of market experience and knowledge to provide professional services that contribute to the success of market participants. Investment funds and institutional investors rely on prime-of-prime liquidity providers to pursue financial well-being by outsourcing these activities to a specialised PB.

This helps firms minimise their operational costs and rely on professional service providers to fulfil these duties.

What is Prime of Prime Brokerage?

On the other hand, PoPs serve tier-2 financial institutions and startups that aim to gain access to investment markets and offer the best trading conditions. 

Prime of prime aggregate liquidity from multiple sources and funding pools and provide them to retail brokers and traders. Additionally, they provide advanced technological means to operators to facilitate a wide range of trading services across multiple securities and asset classes.

These services decrease the gap between mid-sized and large businesses, giving newly established brokers a fair chance to compete and acquire more investors for their platforms.

Conclusion: Which One Shall You Choose?

Selecting the right brokerage partner depends on the type of business you operate. If you own a large financial business with a huge number of transactions and trading volumes, prime brokerage is more suitable.

However, if you’re launching a new Forex trading brokerage platform and looking to quickly make it to the market, then prime-of-prime services can sufficiently support your business to compete with key players.