1. Dealing Desk (DD) FX broker/ Authorised Market Maker  

 

 

Offering bid-offer quotes directly to the retail customer via their on-line platform. Client orders are routed through the Dealing Desk and spreads are usually fixed. A dealing desk broker makes mainly money via spreads and often by trading against its clients.

 

 

2. Non-Dealing-Desk (NDD) or ‘Straight through processing’Model (STP)

 

NDD Broker is directly connected to banks (“Liquidity providers”) in inter-bank market (IBmarket) who forward their bids/offers to the broker. The best buy and sell prices are forwarded to the customer via the platform and the customer places his order.

 

The order can be executed by the broker itself by taking the opposite position (this might be particularly the case where the broker has a contractual agreement with its liquidity providers only to pass through order that are of a certain minimum size) or on commission by giving a principal order to the bank. The banks behind and the customer have no knowledge of each other, the counterpart is always the broker. The spreads are variable, because they depend on the bank spreads. The broker gets a commission. 

 

 

3. Non Dealing Desk (NDD STP+ECN)

 

As well as allowing ‘straight through processing’ to the interbank market, the Non-Dealing-Desk Broker sends client orders to ECN where their client orders interact with other client orders. The spreads are variable, because they depend on the bank spreads. The broker gets a commission.

 

 

4. Dealing Desk + Non Dealing Desk-White Labelling Model

 

In this model the client may access an FX platform via a white label agent.  The exact manner of remuneration between white label providers and agents can vary order-by-order, firm-by-firm -it can be paid on a commission basis which is worked into the client spread (i.e. the white labelling agent add pips to best bid and subtracting pips to best offer) or via rebates to the agent on a volume override basis. The client order is ultimately executed either by white label provider or sent/aggregated to interbank market.

 

 

5. Introducing Broker

 

Any remuneration received by the introducing broker from the broker will vary between firms/orders. Introducing brokers are typically paid commission which is worked into the client spread (i.e. add pips to best bid and subtracting pips to best offer) or again via rebates to the agent on a volume override basis. The client order is ultimately executed either by white label provider or sent/aggregated to interbank market.