Liquidity Provider
A bank or institution that continuously quotes buy and sell prices your broker can route orders to.
Retail brokers rarely hold the other side of every trade themselves. Instead they connect to liquidity providers - major banks, non-bank market makers and prime brokers - that stream two-way prices. The broker aggregates those feeds and shows you the best available bid and ask.
The depth and quality of that pool determines what you actually experience: how tight the spread is, how much size you can trade without moving the price, and how often you are requoted or slipped. A broker with a dozen tier-one providers can absorb a large order far more smoothly than one with two.
This is why serious brokers publish their liquidity relationships and execution statistics. When comparing ECN accounts, the number and calibre of providers behind the price is a more meaningful signal than the advertised minimum spread.
Related terms
Two broker models: an ECN routes your order to outside liquidity, a market maker takes the other side itself.
The gap between the buy and sell price of an instrument - the broker's built-in cost of trading.
The difference between the price you expected on an order and the price you actually got.