# What is Liquidity provider?

> A liquidity provider (LP) is a bank, prime broker or non-bank market maker that streams prices and fills orders, which a prop firm or broker connects to for live execution.

- Source: https://pipvalley.com/glossary/liquidity-provider
- Publisher: PipValley - web design studio for prop trading firms
- Updated: 2026-10-03

In a prop firm, a liquidity provider matters in two places. First, the price feed for the simulated environment usually comes from an LP or data vendor, so simulated fills are only as realistic as that feed. Second, firms that A-book selected traders send those positions to an LP through a bridge.

Prop firms rarely contract an LP directly at the start. Most get their feed and any live execution through their platform provider, a broker partner or a technology vendor that already holds LP relationships.

LP terms cover spreads, commissions, minimum volumes, margin and collateral, and which counterparties they accept. Some LPs will not work with prop firms or require extra due diligence.

## Why it matters

Your price feed is the reference for every breach and payout, so its quality and its source are worth knowing when a trader disputes a fill. If you plan to A-book, your LP relationship sets the cost. Neither belongs on the marketing site, but your FAQ should be able to say where prices come from.