FinanceFeeds Podcast Ep. #19: Liquidity Finder’s Sam Low and the industry’s new LinkedIn

Liquidity Finder launched in 2018 with an initial focus on institutional FX, CFDs and cryptocurrencies, to assist new and established electronic trading businesses find well-matched and sustainable business partners.

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In December 2022, the platform was relaunched with new tools and functionalities to become the LinkedIn of the financial markets.

How Liquidity Finder came about

FinanceFeeds Editor-in-Chief Nikolai Isayev welcomed Sam Low on this week’s podcast to learn more about Liquidity Finder, how it came about and how it can be of use for market participants, as well as the industry’s trendy themes, namely the FX Global Code, options trading, NDFs, and Dubai.

Fluent in Russian and French, Sam Low started his FX career at Bloomberg LP in 1997, catering to the Emerging Markets. After a sales stint at SuperDerivatives, he worked at Integral as VP, European Sales for over seven years, and First Derivatives as Business Development EMEA for over three years.

It was during his time at Integral and then First Derivatives, that Sam Low noticed the market was going through significant changes, he told Nikolai Isayev. Prime brokerage was typically very cheap as Prime Brokers looked to attract retail FX flow, but that quickly changed when PBs became aware of the risks involved. January 15th, 2015, when the Swiss National Bank (SNB) removed the Swiss Franc peg to the Euro and allowed the Franc to float, was a particularly traumatic event for the industry.

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Since then, PBs stepped away from this market and offloaded clients to institutional brokers, which exposed Sam Low to a flood of calls of people looking for Prime Brokers or Prime of Primes, including very specific needs such as “I need a large ticket done in gold and I want pricing out of Tokyo and no last look on 50 million clips for my trade’.

“These questions were fairly consistent and there were comparison sites but nothing on the institutional level of the market (one step above the retail market and one step below the bank market)”, which was something that kept Sam Low awake at night, figuring out if he should turn that idea into a business. “If I don’t do this, someone will”.

In 2018, he started Liquidity Finder with a few Liquidity Providers, who enjoyed the free ride for being the first names on the website. As the business got more traction, new additions paid a monthly fee in exchange for increased visibility and potential inquiries from customers. Now, the platform provides access to about 30 names.

Always part of the idea was to provide a means of interaction between users, allowing them to create accounts, share information, and self-publish content. Liquidity Finder has gone live with these social features in December 2022, thus becoming a new social networking site: the LinkedIn for the financial markets.

The goal was to provide a richer environment for customers and get to know customers a little bit more: who they are, their needs, what they are looking for, and their opinions. “If they can share with the rest of the audience there’s more added value”, he said.

The matching tool that saves time and costs

So, what is Liquidity Finder? A matching tool that addresses all the specific needs of a market participant, including the asset class, jurisdiction, data center, collateral, size of deposit, etc. By filling their requirements, users will be able to shortlist brokers than can accommodate those requirements.

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Sam Low stated that Liquidity Finder’s matching tool is not only a time-saver – inquiry is sent to dozens of Liquidity Providers – but it also gets good deals for market participants who would otherwise reach out to only a few names and probably strike a sub-optimal deal.

It is also worth to point out that users can deselect brokers on the inquiry list, namely the ones they already have a relationship with.

Besides helping brokers reduce costs and time, the service is free and Sam Low encourages users to reach out to him to clarify any questions and go through the process because “the time it takes me to do that is time well spent as far as I’m concerned: I get to know more about the market and the capabilities of the liquidity providers.”

Liquidity Finder features market volumes data and a jobs board

Liquidity Finder boasts further valuable tools for market participants, including market volumes data. “Very actively monitored MoM by people from all ends of the market. They use it as proxy for their own business”, Sam Low continued, adding that users must be registered to get that information, but it only takes about a minute to create an account.

The jobs board is another valuable feature on the platform and available for free to all. The board has nearly 100 companies posting jobs there, automatically, and the platform is “knocking on the door of 10,000 job postings”.

Based on the number of job posts coming from crypto companies, which have increased in recent months, it could be said that confidence in the crypto space is on the rise. But traditional brokers are also actively and consistently recruiting, Sam Low added. “A healthy industry. No sign of massive cutbacks unlike the software industry.”

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Volatility may be giving a hand to the trading industry as he noted that firms used to complain five years ago, but now we’ve seen two years of “wild stuff” and there’s no expectation that it will go quieter any time soon.

The rise of p2p trading and reliable execution

Regarding the industry themes for 2023 and beyond, Sam Low said it’s about time that peer-to-peer FX trading picks up. “Good to see greater dispersal of liquidity among players”.

P2P trading – the direct buying and selling of cryptocurrencies among users without intermediaries – is being introduced in FX after first being used in crypto, noticeably more popular within the institutional space. “I think it will be like that on the FX world”.

Sam Low also noted that efficient and reliable execution has become more prevalent, much to do with the rise of FairXchange and Tradefeedr, which promote transparency over the execution process.

Also tightening the FX industry’s behavior is the mainstream adoption of the FX Global Code, which has now become the norm, the default, he said as he praised the GFXC for its good job at maintaining the momentum to get people to sign up to the code, with major platforms now making it compulsory. “Who will want to trade with non-signatories?”

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The Liquidity Finder founder said he would like to see the FX Global Code be extended to the retail brokerage space and hopefully tidy up the industry in a self-regulatory way.

“It’s obvious to retail broker clients that you can’t trust Trustpilot or ForexPeaceArmy reviews”, Sam Low said, pointing to independent audits to FX Global Code signatories as the next best thing to legal requirements. If execution is not what it should be, users should be withdraw their deposits or, “that fails for whatever reason, they can come to people like the Financial Commission”, he said, mentioning the independent, international body that provides traders and brokers with an external dispute resolution (EDR) mechanism and helps settle escalated issues between clients and their financial services providers as a neutral third party.

NDFs and options, the new shiny toys for retail brokers

As to the banking crisis, while the question “how far will it go?” remains, Sam Low notices a spike in precious metals and crypto. “Quite surprised by how people moved back into what was considered a very speculative, dangerous market. Is it a direct consequence of lack of trust in banks?”

Also on the way up are Non-Derivable Forwards, which are likely to be picked up by retail brokerages as the “new shiny toy for clients to play with” as MT4/5 bridges integrate NDF products. “Every retail broker is in an arms race with their competitors”, he noted, pointing to zero date expiry options and crypto pricing as other examples of ‘shiny toys’.

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In regard to options, these very sophisticated and leveraged instruments can be used for hedging or as a speculative tool, should not be confused with binary options – “generally speaking, a scam”, but nevertheless, “treat with caution” as retail brokers increasingly look to add options products to their offerings. “The new flavor of the year”.

Other industry trends include the rise of Dubai as a financial hub and 24/7 trading, the latter already live in the digital asset space. “The crypto market is setting quite a standard”, he said, as he pointed to the inevitability of FX following suit. Maybe not this year or next year”.

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