Do CFD providers withhold liquidity in a market panic?
Do CFD providers withhold liquidity in a market panic?
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curious · External communityPost link
External question — Personal Finance Stack Exchange
Author: curious
Original post: https://money.stackexchange.com/questions/24856
License: CC BY-SA 3.0 — https://creativecommons.org/licenses/by-sa/3.0/
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My understanding of CFD providers in UK is that they try to imitate the real market action by being market makers. However, is it a risk that they may withhold liquidity in a market panic crash to protect their own capital? Will their clients be unable to sell at a fair market price in a panic crash? Also, do CFD providers sometimes make an occasional downward spike to cream off their clients' cut-loss order? Since they are market makers, what is to prevent them from attempting these tricks? Are these concerns also valid for forex brokers serving the retail public?
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Quoted from Forex.com.bd-Editorial External question — Personal Finance Stack Exchange Author: curious Source score (net votes, not local likes): 0 Original post: https://money.stackexchange.com/questions/24856 License: CC BY-SA 3.0 — https://creativecommons.org/licenses/by-sa/3.0/ Adaptation: HTML converted to plain text; contact email addresses removed. My understanding of CFD providers in UK is that they try to imitate the real market action by being market makers. However, is it a risk that they may withhold liquidity in a market panic crash to protect their own capital? Will their clients be unable to sell at a fair market price in a panic crash? Also, do CFD providers sometimes make an occasional downward spike to cream off their clients' cut-loss order? Since they are market makers, what is to prevent them from attempting these tricks? Are these concerns also valid for forex brokers serving the retail public?
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