The specificities of an ECN broker


To be able to start trading online, the first step is to choose a broker and register with them. Before proceeding with the various formalities, it is important to know the different types of existing platforms, knowing that each operator can adopt a specific business model. Today, discover the specificities of an ECN broker and its advantages

What is an ECN broker?

To know what an ECN broker is, you must first know the ECN or Electronic Communication Network, which are in fact marketplaces. All transactions are executed directly at the interbank market level. These brokers are thus placed in the category of “No dealing desk”.

no dealing desk

With an ECN broker, the order book is revealed in real time. As well as the prices prevailing on the interbank market. In this way, the market is transparent and all players benefit from all the information essential for their operations, always in real time. As for the broker’s remuneration, it is generally based on the volume traded, taking the form of a commission (this is about $10 to $20 for each million transactions). It should be noted that this can become quite high depending on the volume traded by the investor.

The meeting of supply and demand

In order for a market to work, buyers and sellers find themselves in the market. This brings together banks, traders and market makers. For its part, broker ECN ensures that orders from its clients are matched. In the event that an order is not “matched”, the broker solicits a liquidity provider (in the jargon, this is the LP for Liquidity Provider).

broker no dealing desk

These are in fact banks that offer ECN broker clients the possibility of benefiting from good liquidity and interesting spreads (it should be noted that these are variable for this type of broker). However, it should be stressed that these spreads can skyrocket when the trend is highly volatile (after the revelation of major economic news, for example). In the event of a shattering announcement, it is possible that the spread on the main currency pair EUR/USD could reach 10 pips.

For whom? For whom?

Previously, broker ECN was exclusively aimed at professionals and institutions. Now, individuals can also benefit from their services. They can even obtain liquidity from this operator. Here, the advantage for participants is that a broker of this type is never against his client, his mission being to ensure orders at the interbank market level.

Customers can also carry out a transaction by placing themselves within a price range (between the one requested and the one offered. This is one of the specific characteristics of any ECN broker. In any case, it is quite possible to remain anonymous by placing orders.

masslib.net offers ECN brokers in its selection, so we can find in this GI category which is a reference in online trading.