What is a liquidity provider?
It is an activity undertaken by an institution licensed by Qatar Financial Markets Authority (QFMA) to provide sell and buy orders on a continuous basis with minimum bid-ask spread and minimum size .
Does liquidity provider control prices ?
How Bid-Ask orders are priced?
They are priced based on the trading on the share in the current and previous trading sessions .
Do human beings intervene in liquidity provider system ?
The system works by algorithms which read the market in real time and make automatic decisions and performance is continuously monitored .
How many orders can the liquidity provider place in one trading session?
There is unlimited number and there can be thousands of orders in one trading session and dozens of orders can be placed for multiple shares at the same time .
Do liquidity provider orders remain in the market till the end of the trading session?
Each order has a an expiry time after which it will be cancelled , during this period the order price and volume could be modified many times at the jumping interval which is random also to simulate the human behavior
Does the average investor note the existence of the liquidity provider?
Investors are more satisfied because they could find better prices to trade , they can’t recognize the LP system orders as the system simulates human behavior and there is no pattern for orders
Does liquidity provider execute orders at the market price?
Liquidity provider submits orders at the market depth to give the regular investors the change to execute their orders .
Does LP require big portfolio?
No , The turn over for LP portfolio is high and could be several times per day , for example: using only three millions QR portfolio LP can trade 10% of total trading for a share with average trading value QR 50 Million .
Does liquidity provider make profits?
Liquidity provider cannot make profits as it executes sell orders when the market is on rise and executes buy orders when the market falls.
Is it possible to control losses?
Yes, it is possible to set maximum loss per day / month / year
What is the percentage of the liquidity provider’s trading losses?
The average rate is 0.14% added to it the usual trading fees.
What is the benefit of the investor in a share?
LP gives better opportunities to investors , more liquidity in the share attracts new investments which in turn raises its relative price. It has been proven statistically that running liquidity provider system on a share leads to an improvement in its relative price .
What is the benefit for a listed company?
Higher share price raises the market value of a listed company, this provides the company additional capital value when it seeks capital increase which is considered direct income on the company's balance sheet
How the cost of the liquidity provider is paid?
These costs are paid through a contractual relationship between the listed company and the liquidity provider and such relationship is ruled by the terms of the liquidity provider and the upper limit of the liquidity provider costs .
How a listed company can monitor the performance of the liquidity provider?
As part of its service The Group makes a screen available to the issuer where the issuer can follow the market on a real time basis and see the LP orders.
Can The Group Company benefit from liquidity provider activity?
This activity is totally separated from The Group activities as a broker and is performed in a separate account exclusively allocated for LP , The Group clients’ orders can be executed against LP orders just like orders of other investors .
Who supervises the liquidity provider activity?
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