Liquidity providers are essential to the smooth functioning of any trading platform. They are the counterparties that supply the capital needed to execute trades quickly and at fair prices. Regulated brokers disclose their liquidity partners to prove transparency and pricing integrity. But some shady brokers abuse this concept through the Non-existent Liquidity Providers scam—where fake or phantom liquidity sources are cited to justify poor execution, slippage, or suspicious trade outcomes.

This article exposes how the scam works, how to spot it, and how to protect your capital from being siphoned under the illusion of third-party liquidity.

What Is the Non-existent Liquidity Providers Scam?

The Non-existent Liquidity Providers scam occurs when a broker falsely claims to route trades through external liquidity providers. In reality, these “providers” either:

• Don’t exist at all
• Are shell entities created by the broker itself
• Or are internal dealing desks acting as the counterparty

This deception is used to:

• Manipulate pricing
• Justify failed or delayed trade execution
• Blame “third parties” for withdrawals or trade disputes
• Give the illusion of being an ECN or STP broker when they are actually market makers

How the Scam Works

Step 1: Broker Markets Itself as ECN/STP

The broker claims to offer:

• “True market execution”
• “Direct access to tier-1 liquidity”
• “Ultra-low spreads from institutional providers”

The branding implies fast, fair, and transparent trade execution.

Step 2: Platform Shows Problematic Trade Activity

Traders experience:

• Excessive slippage
• Price spikes not seen on other charts
• Delays in opening/closing trades
• Failed orders during high-impact news

When questioned, the broker responds with: “It was due to our liquidity provider’s pricing or delays.”

Step 3: The Liquidity Providers Cannot Be Verified

If traders request a list of liquidity partners, the broker may:

• Provide generic names like “Global Markets Ltd.” or “Tier One Liquidity Inc.”
• Refuse to disclose any partners citing “confidentiality”
• Link to companies with no digital footprint or regulatory standing

In some cases, these “providers” are shell companies owned or operated by the broker—creating a circular flow of pricing and execution.

Step 4: Broker Uses the Excuse to Avoid Accountability

When a dispute arises over execution or withdrawals, the broker blames:

• “Liquidity provider system error”
• “Delayed confirmation from third-party desk”
• “Pending order clearance from execution venue”

All of these are made-up, and serve to stall resolution or discourage further complaints.

Red Flags to Watch For

Lack of Named Liquidity Providers

Genuine brokers clearly disclose who provides liquidity (e.g. LMAX, Currenex, Saxo, JP Morgan). If the broker refuses to name any, it’s likely fake.

No Matching Price Movement on Reputable Feeds

If the broker’s platform shows strange price spikes or gaps not visible on TradingView or major platforms, they’re faking market data.

Frequent Execution Issues Blamed on Liquidity

If slippage, rejections, or trade delays are always blamed on “the LP,” and never explained in detail, it’s an excuse.

Fictitious Company Names or Non-Regulated Entities

If you research the liquidity providers and find no websites, no LinkedIn presence, and no regulatory registrations, they don’t exist.

Broker Operates Without Tier-1 Regulation

Unregulated brokers are free to claim whatever liquidity model they want without oversight—often inventing names to sound legitimate.

How to Protect Yourself

Ask for the Names of Liquidity Providers Before You Deposit

A legitimate ECN/STP broker will name its liquidity partners or at least offer proof of integration with real venues.

Compare Prices Across Feeds

If your broker shows different price behaviour compared to LMAX, Pepperstone, or IC Markets feeds, something is wrong.

Avoid Brokers That Won’t Disclose Trade Routing

If a broker can’t explain whether they’re A-booking, B-booking, or using hybrid models, they’re hiding something.

Use Only Regulated Brokers

Stick with brokers regulated by authorities like the FCA, ASIC, or CySEC. These regulators require proper disclosure of trade execution models.

Check Execution Reports and Logs

Legit brokers will let you view execution reports that show the venue, price, and time of order fill. If this is hidden or unavailable, walk away.

Conclusion

The Non-existent Liquidity Providers scam is a modern shell game—designed to make traders believe their orders are processed by neutral third parties when they’re actually being manipulated by the broker itself. By faking liquidity sources, these brokers create false credibility, mask shady practices, and avoid responsibility for unethical execution.

To trade confidently and ensure you’re never misled by fake LP claims, enrol in expert-led Trading Courses that teach broker due diligence, execution model transparency, and how to detect manipulation from the first login.