Heather McLean
Heather McLean

Join the professionals - maximise your trading and investment potential with a Retail FX ECN platform

Electronic Communications Networks (ECN) have revolutionised the Institutional FX market and many commentators believe ECN-style trading platforms are likely to do the same in Retail FX. Heather McLean explores the options available to Retail FX traders who might be looking to switch from a traditional market-making broker to an ECN platform provider.

First Published: e-Forex Magazine 45 / Retail e-FX Client / October, 2011

Most FX brokers are Market Makers (operating Dealing Desks) who “make” both the bid and the ask prices on their trading systems and display them publicly on their quote screens. They undertake to execute transactions at the prices they have quoted to their customers.  As counterparties to each FX transaction Market Makers must therefore take the opposite side of a customers trade. So whenever a trader sells, they must buy from them, and vice versa. This traditional DD trading model is the most commonly practicised throughout the Retail FX trading marketplace. ECN platforms on the other hand pass on prices from multiple market participants, such as banks and Market Makers, as well as other traders connected to the ECN, and display the best bid/ask quotes on their trading platforms based on these prices. ECN platform providers make money by charging customers a fixed commission for each transaction. Authentic ECNs do not play any role in making or setting prices. This means the risks of...continued

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