What is Difference Between Electronic Communication Network and Straight Through Processing Account in Indices Trading?

ECN Account vs Trading Account

ECN Accounts

ECN Account stands for Electronic Communication Net-work, these ECN Account brokers are connected to the interbank network directly through an electronic communication network & orders from the ECN Account are placed straight to the electronic net-work.

The ECN Account will illustrate 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 trading broker.

The ECNs account will charge commissions + spread for every trade. For these ECN Account execution method every trade is matched to another in realtime over the interbank network - ECN Network.

STP Accounts

STP Account stands for Straight Through Processing, the STP Account brokers will send client orders direct to their Indices Liquidity Provider, the Indices Liquidity Provider is a large bank with deep liquidity that's required to trade on the inter-bank network.

An STP Account provided by an STP trading broker can either have one Indices Liquidity Provider or many liquidity providers.

The best thing about STP Accounts is that stock traders can place their stock trades immediately with instant execution because they have access to interbank markets via their STP trading broker.

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