What is Liquidity Provider (LP)?
A Tier-1 bank, prime broker, or inter-bank ECN that quotes bid/ask prices to retail brokers — the wholesale source of forex liquidity.
A liquidity provider (LP) is an institution that supplies tradable bid/ask quotes to retail forex brokers at the wholesale level. The major LPs include Tier-1 banks (JPMorgan, UBS, Citi, Goldman Sachs, Deutsche Bank, HSBC, Barclays), prime brokers, and inter-bank ECNs (EBS, Refinitiv Matching).
When you place a trade at an ECN/STP broker, the broker electronically polls multiple LPs and routes your order to whichever LP shows the best price at that moment. The broker pays the LP the LP's raw spread; the broker recoups by adding either a small markup or a separate commission to the trader.
The number of LPs a broker connects to is a quality signal — top brokers list 15-30+ LPs, with each LP specializing in particular instruments (e.g. BNP Paribas dominant in EUR, MUFG strong in JPY). More LPs = tighter aggregated raw spread because the broker has more competing quotes to choose from on every trade.