Index Brokers Types

ECN, STP, NDD, DD, Market Makers

The listing below shows the various different categories of brokers classified depending on their execution technique.

ECN

ECN Stock Index Trade Account stands for Electronic Communication Net-work, these ECN Indices Trade Account brokers are connected to the interbank network directly through an electronic communication network & indices orders from the ECN Stock Indices Trade Account are placed straight to the electronic network. ECN Indices Trade Account will display different orders from different banks. Indices quote placed by these ECNs net-work of banks are direct from them to the inter bank network and orders are executed directly to the inter bank market once a trader trading with this ECN account places an order with their broker,

These ECNs trading account will charge commissions + spread for every position. For these ECN Indices Account execution method/technique every trade order is matched against another in realtime over the inter bank network - ECN Network.

STP

STP Indices Trade Account stands for Straight Through Processing, the STP Indices Account brokers will send their client' orders direct to their Liquidity Provider, the Liquidity Provider is a big bank with deep trading liquidity(deep pockets) to trade on the interbank network.

An STP Indices Account provided by an STP stock broker can either have one Indices Liquidity Provider or multiple Liquidity Providers.

The best thing about STP Indices Accounts is that stock traders can place their stock trade transactions immediately with instant execution because they have access to interbank markets through their STP stock broker.

STP Indices Accounts will not charge commissions, but will charge spread on stock indices trades. Because traders have access to inter bank market execution, there's no re-quotes on the orders neither any order waiting for execution, order execution is instant.

Difference between STP and ECN Execution

NDD

NDD stands for Non-Dealing Desk indices execution of orders, these NDD Indices Account brokers don't implement a dealing-desk this makes this type of order execution to have less restrictions as opposed to the Dealing Desk (DD) Execution.

NDD Order Execution means that trade positions from the online traders account will be executed directly to online interbank exchange stock market. Orders will be matched with other orders in the online market using the broker Non Dealing Desk trade order execution model.

DD stands for dealing desk, these DD brokers have a dealing desk execution model where they can match orders & execute order in the online market.

The trader trading with a DD account will get a lot of requotes.

Dealing Desks, DD will issue traders with a lot of trading order requotes, meaning prices of orders are not real time and stock trading broker can requote a trader's order if the price of the market changes quick enough before the broker's dealing desk places the order online or before they match the order in the online market.

Dealing Desk trading accounts therefore means that the order execution of orders isn't instant & therefore this execution model might mean that orders executed using a DD Stock Index Trade Account aren't executed as quickly as when compared to an ECN account or an STP account.

Market Makers

MM are broker accounts where Market Maker brokers have a dealing desk execution model where they can match the orders in house without going to the market.

Stock Index orders also can be executed against their clients - meaning the online broker can take the in the opposite trend side of a traders open trades. This trading broker can make the decision to either execute a order that is the in the opposite trend of a trader's order thus if the trader makes a loss the broker makes a profit, and if trader makes a profit the online broker makes a loss.

Regulated Stock Index Brokers

Regulated Stock Index Brokers are those that operate under a financial regulatory authority, these companies will adhere to a strict code of ethics lest they lose their license, these are the genuine companies which are trusted by traders as they don't carry out un-shady practices against their clients because they're audited by their regulators annually

Regulated + STP Execution is the best choice to trade with.

Index Brokers Type - Indices Brokers Types - ECN, STP, NDD, DD, Market Makers - Indices Liquidity Provider - Stock Index Liquidity Providers

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Index Brokers Types

ECN, STP, NDD, DD, Market Makers

Regulated Stock Index Brokers