NDD execution: providing a conflict free environment for Retail FX traders

In forex trading, the electronic execution engine used by Non Dealing Desk (NDD) brokers provides traders with direct access to streaming prices from multiple liquidity providers. Unlike in the past, when trades were managed by the broker’s deal desk, trades now go directly to the broker’s NDD execution engine, which instantaneously places an identical trade with the price provider. Heather McLean takes a look at why NDD is the electronic forex trader’s golden fleece.

First Published: e-Forex Magazine 41 / Retail e-FX Client / October, 2010

  NDD can help remove the conflict of interest between brokers and traders, states Ross Ditlove, CEO at MB Trading. He comments: “It is your broker’s job to get your entry or exit price on a trade.  You do not want a broker who will take your order, route it to a bank which pays them the most for that order, and in return gives you less than best price on the fill. FX traders miss this critical point, to their detriment.” NDD assists in reducing the potential for market interference by price providers, says Ditlove. Considering execution on the MBT system from the perspective of one of MB Trading’s liquidity destinations, if they want to buy or sell, they need MBT to route orders to them. “Our system routes to the destination showing the best price available at the time the trade request comes in from our retail customer. The bank will have to display a quote that is the best available on the MBT system to have the chance of getting orders from us. This is a...continued

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