Different Types of Indices Brokers - Types of Stock Indices Broker
Straight Through Processing Broker, NDD
Different Types of Indices Brokers List - below is an explanation of the Different Types of Indices Brokers.
ECN - Electronic Communication Network Broker - Types of Indices Brokers
ECN Broker stands for Electronic Communication Network, these ECN indices brokers are connected to the interbank network directly through an electronic communication network & indices orders from the ECN Indices Broker are placed straight to the electronic network. The ECN Broker will display different indices quotes from different liquidity providers. The quotes placed by these ECNs network of liquidity providers are direct from the interbank network and indices orders are executed directly in the interbank indices market - once a trader trading with an ECN broker places a indices order with their stock indices trading broker.
These ECN brokers will charge commissions + spread for every indices trade transaction order. For these ECN Broker execution technique every indices trade is matched to another in real time over the interbank network - ECN Network.
STP - Straight Through Processing Broker - Types of Indices Brokers
STP Broker stands for Straight Through Processing, the STP indices brokers will send client trading orders direct to their Indices Liquidity Provider, the Indices Liquidity Provider is a large bank with deep liquidity to trade on the interbank network.
An STP Broker can either have one indices liquidity provider or many liquidity providers.
The best thing about STP Indices Brokers is that stock indices traders can place their stock indices trades immediately on the online indices market with instant execution because they have access to the interbank market through their STP indices broker.
STP Indices Brokers will not charge commissions, but will charge spreads on stock indices trades. Because indices traders have access to interbank markets execution, there's no re-quotes on the indices orders neither is there any indices order waiting for execution, the order execution is instant.
NDD - Non Dealing Desk Broker - Types of Indices Brokers
NDD stand for Non-Dealing Desk indices execution of orders, these NDD indices brokers do not implement a dealing desk & this makes this type of order execution to have less trading restrictions as opposed to the Dealing Desk Indices Trade Execution.
NDD Execution means that stock indices trades from the traders account will be executed directly to online interbank exchange stock index market. The indices orders will be matched with other trading indices orders in the interbank exchange market using the broker Non Dealing Desk order execution model.
DD - Dealing Desk Broker - Types of Indices Brokers
DD stands for dealing desk, these DD indices brokers have a dealing-desk where they can match stock indices orders & execute indices orders in online inter bank exchange market.
The indices trader trading with a DD broker will get a lot of re-quotes.
Dealing Desks will issue indices traders with a lot of order re quotes, meaning indices prices of indices orders are not real time and the broker can requote a indices trader's order if the stock indices price of the stock indices trading market changes quick enough before the broker's dealing desk places the order online or before they match the indices order in the online interbank stock indices market.
Dealing Desk indices brokers therefore means that order execution of indices orders is not instant and therefore this indices execution model may mean that indices orders executed using a DD Broker are not executed as quickly as when compared to an ECN trading broker or an STP broker.
Market Maker Broker - Types of Indices Brokers
Market Maker are indices brokers that have a dealing desk where they can match indices orders in house without going to the online inter-bank exchange market.
Indices orders can also be executed against their indices traders - meaning the broker can take the opposite side of a traders open stock indices trades. This indices broker can make the decision to either execute a indices order that is the opposite direction of a trader's order thus if the trader makes a loss the broker makes a profit, & if indices trader makes a profit the broker makes a loss.
