What's Difference Between Straight Through Processing and Dealing Desk Account in Indices Trading?

STP Account vs DD Account

STP Accounts

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

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

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

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

DD Accounts

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

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

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

Dealing Desk accounts therefore means that order execution of stock indices orders is not instant & therefore this execution model may mean that orders executed using a DD Account aren't executed as quickly as when compared to an ECN account or an STP account.