Currencies & forex
Guidance for treasury teams on establishing relationships with multiple liquidity providers to ensure competitive pricing.
In today’s fast-moving markets, treasury teams should cultivate diverse liquidity partnerships, implement rigorous pricing governance, and continuously monitor provider capabilities to protect against disruption and secure optimal quotes.
July 23, 2025 - 3 min Read
Establishing a robust liquidity framework begins with mapping the organization’s specific trading needs, including peak processing times, currencies commonly involved, and acceptable risk thresholds. Treasury leaders should define target volumes, acceptable spreads, and service level expectations for execution, settlement, and error handling. Early scoping also highlights whether to pursue spot, forwards, or non-deliverable instruments based on regulatory constraints and operational capacity. By documenting required data feeds, connectivity options, and reconciliation processes, teams create a baseline to compare potential providers objectively. This clarity reduces negotiation friction and helps lock in consistent pricing across multiple counterparties from day one.
A strategic approach to onboarding begins with selecting a mix of established banks, non-bank liquidity providers, and fintech-enabled venues. Diversification mitigates single-vendor risk while expanding access to varied pricing models, such as tiered spreads, dynamic rebates, or liquidity rebates tied to volumes. Treasurers should assess each provider’s footprint, technology stack, and settlement timelines, then align these capabilities with internal risk policies. Importantly, a formal due diligence process should evaluate counterparty creditworthiness, operational resilience, and disaster recovery plans. Establishing a transparent governance framework ensures that decision rights, review cycles, and documentation standards remain consistent across all relationships.
Create repeatable processes for onboarding, monitoring, and renegotiation to sustain pricing discipline.
The due diligence phase must extend beyond balance sheets to include real-time performance testing. Vendors should be evaluated through simulated trades, latency benchmarks, and order-routing efficiency across different market conditions. Documentation should capture minimum execution sizes, expected fill rates, and slippage tolerances under stress scenarios. Operators must understand how quotes behave during liquidity squeezes or periods of high volatility, ensuring that slippage remains within acceptable boundaries. By requiring accessible service level agreements and incident-history disclosures, the treasury team gains a reliable frame of reference for ongoing performance management.
Ongoing governance hinges on a structured review cadence and a clear escalation ladder. Regular meetings should review execution quality, counterparty credit events, and fee movements, with a formal mechanism to veto or adjust trading permissions if performance deteriorates. Price transparency is essential; providers should supply a clear breakdown of spreads, commissions, and any ancillary charges in an auditable format. Integrating third-party market data can help validate quotes and reveal inconsistencies across venues. A standardized monthly reporting package promotes accountability and simplifies compliance with internal risk limits.
Align pricing discussions with risk limits, forecasting, and operational readiness.
In practice, the onboarding playbook evolves from a static checklist to a living, data-driven workflow. Initial setup should include secure connectivity, standardized message formats, and consistent authentication mechanisms. As relationships mature, the focus shifts to monitoring, benchmarking, and negotiating. Treasuries should establish price tests that compare current quotes with historical baselines and peer benchmarks, adjusting expectations in light of market dynamics. A proactive stance involves collecting feedback from traders on quote quality, latency, and fill certainty, then channeling that input into performance reviews. This iterative approach yields tangible improvements in pricing efficiency over time.
Negotiation strategies should emphasize total cost of ownership rather than headline spreads alone. Volume tiering, preferential liquidity access, and consolidated billing can produce meaningful savings when aligned with forecasted activity. Providers may offer loyalty incentives for sustained volumes or long-term commitments, but these should be evaluated against flexibility and exit options. Negotiators should insist on standardized, language-free contracts, with clearly defined settlement mechanisms, dispute resolution processes, and data portability provisions. A collaborative stance — where the treasury shares forecast data with providers — often yields more favorable terms and stronger working relationships.
Leverage technology and governance to sustain disciplined liquidity management.
Price intelligence mechanisms must be capable of adapting to a multi-venue environment. Implementing real-time or near-real-time quote comparison helps detect favorable opportunities while avoiding buried costs. It is essential to segment pricing by instrument type, tenor, and currency to reveal hidden divergences. Treasury teams should monitor spread volatility across venues and identify periods when fees spike due to market stress. By maintaining a centralized pricing dashboard, teams can rapidly assess how each provider contributes to the overall cost of liquidity and allocate trades to the most efficient venue without compromising control.
Technology choices influence outcomes as much as relationships do. A modern treasury stack should support standardized APIs, streaming quotes, and automated order routing that respects governance rules. Connectivity should be resilient, with redundant paths and robust error-handling to minimize outages. Data integrity is non-negotiable; timestamps, trade confirmations, and settlement notices must be consistent across systems. Visualization tools help risk managers spot trends and anomalies, while audit trails support regulatory reviews. Integrating liquidity analytics with forecasting models improves decision quality and reduces execution risk.
Foster cross-functional collaboration for durable pricing and reliability.
Crafting a reliable contingency plan protects pricing advantages during disruptions. Simulated disruption drills test how quickly the treasury can switch providers, resubmit orders, or reroute liquidity without compromising settlement timelines. Such exercises reveal gaps in connectivity, data feeds, or reconciliation procedures that require remediation. Documented playbooks should specify who approves changes, how reversals are handled, and how customers are informed about interruptions. Regularly updating these procedures ensures preparedness for events like system outages, cyber incidents, or sudden liquidity dries up.
Collaboration with internal stakeholders strengthens the procurement of liquidity. Front-line traders, risk managers, and finance sponsors must share a common vocabulary around liquidity objectives, benchmarks, and acceptable risk. Clear communication reduces misunderstandings when changes in pricing or terms occur. Cross-functional reviews help capture a broader set of requirements, including regulatory considerations and tax implications. By maintaining a culture of transparency and accountability, the treasury team builds trust with providers and speeds up problem resolution when issues arise.
The final phase emphasizes performance-based incentives that align provider behavior with business goals. Regular, outcome-focused reviews reward reliability, speed, and accuracy while discouraging unnecessary complexity or opaque fee structures. A transparent re-pricing mechanism ensures that adjustments to spreads or rebates reflect current market conditions and actual execution performance. Organizations should publish their pricing framework internally so stakeholders understand how quotes are evaluated and how savings accrue over time. This visibility reinforces prudent decision-making and sustains competitive pressure among liquidity partners.
As markets evolve, so should the treasury’s relationships with liquidity providers. Continuous improvement hinges on adopting better benchmarking, expanding venue access, and refining data governance. Strategic adjustments—such as onboarding new venues, renegotiating terms, or retiring underperforming partners—must be data-driven and well communicated. Finally, embedding liquidity management into the broader treasury strategy ensures sustainable pricing, resilience, and efficiency across all currency operations, even during periods of heightened volatility.
