We are developing the frequency-domain multiplexing (FDM) readout for the SAFARI far-infrared spectrometer on board the SPICA space observatory. Each readout channel comprises a set of ~ 160 TESs and LC filters and is read out with a SQUID preamplifier. Baseband feedback is applied to overcome the dynamic range limitations of the SQUID. We have carried out extensive characterization of a test readout system coupled to a 176-pixel TES bolometer array in order to understand and optimize the system. We present our latest measurements of this 176-pixel FDM demonstrator, focusing on the noise contribution from the SQUID.