How we make money

Electronic Communications Networks or ‘ECNs’ are off-exchange execution venues which allow market participants to trade with a range of counterparties anonymously. They are the main trading venues for OTC markets such as Foreign Exchange and Metals.

This basically means ECNs provide the technology and venue for price makers aka ‘liquidity providers’ to distribute their liquidity. Price takers (traders) can see these prices and execute trades against them. The ECN is therefore responsible for prices/quotes and the execution of orders.

See our ECN page for a detailed overview of the Global Prime ECN offering.

No. Unlike the majority of Forex and CFD providers, we do not profit from client trading losses, nor do we run a B-book. Global Prime is an ‘A-book’ broker, which means we hedge all market risk and therefore don’t stand to gain from client losses.

We utilise the ‘A-book net’ dealing model for small Forex and Metals trades that are below our prime broker minimum in order to reduce minimum ticket fees. It is possible for Global Prime to make a profit on these small forex and metals trades, when a client has made a loss, but only in specific scenarios. These scenarios are incidental and the exception rather than the aim of the A-book net model.

Examples when this can occur are:

• If we accept an order from a client and then hedge that trade at a better price
• If a client opens and closes a small trade, in quick succession, before we hedge it, and this trade closes in a loss

It is incorrect to say we profit from client losses for several reasons, namely:

• In the case of scenario 1, if there is a loss then it is only over a specific time horizon, i.e. it is an open trade and an unrealised loss, and they could close the trade in a profit.
• In the case of scenario 2, since all market risk is hedged by Global Prime, we do not, in the aggregate, stand to gain or lose from market movements, and our profit is not contingent on clients losses or clients losing.
• We do not profile, classify, or segregate clients into different books or make hedge execution decisions based on client profitability or trading behaviours. This simply means that we are not taking measures to monetize the process by skewing the odds in our favour, i.e. batch hedging of small trades is a fee preventing/cost reducing exercise and is not designed as a profit center.

Global Prime makes money from commissions, spreads, swaps and interest. We do not profit from client losses.

Global Prime’s LP’s consist of Tier-1 banks, non-bank market makers, ECNs and dark pools. Some of our LP’s include the following: Goldman Sachs, Saxo Bank, Deutsche Bank, BNP PARIBAS, UBS, LMAX, XTX, CREDIT SUISSE, HSBC, Natwest, STANDARD CHARTERED BANK, Vidarr Capital, Citadel Securities.

All FX/Metal trades > 50,000 are executed in the real market directly and will be filled by our LP’s.

FX Trades < 50,000 are executed in the real market once the net position of small trades exceeds the batch hedge size. This is due to the high cost to hedge individual small trades.

All CFD trades go to our non-bank market makers who specialise in indices and commodities trading to ensure the tightest prices and best execution. Find more information here https://www.globalprime.com/best-execution/

B-book brokers take the opposite side of clients positions and assume the role of market maker. What this means is that clients trades are not hedged in the real market. This means the broker profits when the client loses, creating a clear conflict of interest between broker and client. B-book brokers have a vested interest in the client losing money as this becomes their profit.

An A-book broker is a broker that executes all clients trades in the real market. In this model, the broker has no interest in clients losing as client losses are not earned by the broker. There are fewer conflicts of interest between A-book brokers and their clients, and when the clients win, the broker is better off - as they are making the broker commissions.

Global Prime does not run a B-book. This means that we do not profit from client losses or trade against our clients. We believe the role of a broker is merely to act as the intermediary between the banks.