Dealing Desks (DD) vs No Dealing Desk (NDD) Brokers
To Clarify the differences and terminology of the different Broker types and trading conditions they provide traders.
If you been reading about forex trading you must have come across the acronyms DD, STP, DMA, NDD & MM. I’ll try clarify the differences and try to put something to remember each and their meanings.
Keynote:
A Dealing Desk (DD) broker, also known as a Market Maker (MM)
A No Dealing Desk (NDD) is also referred to as Straight Through Processing (STP) or Direct Market Access (DMA) and closely related to an ECN.
Dealing Desks (DD)
A Dealing Desk (DD) broker, also known as a “market maker,” is a type of forex broker that acts as a counterparty to their clients‘ trades. This means that when a trader places a trade with a DD broker, the broker is essentially taking the other side of the trade.
Market makers are also known as dealing desk brokers. This is due to the fact that they generate revenue through spreads and providing liquidity to their clients (You! ), typically by taking the opposite side of their trades.
In other words, they create a market by countertrading your buy and sell orders.
There are trading desks that may fill your orders at their discretion based on whether or not their own opposing position could be advantageous for them, but this is not always the case.
Dealing Desks (DD) bid/ask quotes
Ideally, market makers adhere to their stated bid/ask quotes and fill client orders regardless of the performance of the positions.
Before accepting a countertrade or passing it on to a liquidity provider, dealing desk brokers typically attempt to obtain a matching long or short order from another client. A liquidity provider is typically a large business that can quickly purchase or sell a financial asset.
As a result, they are able to limit risks by profiting from the spread rather of taking the opposing side of the client’s transaction.
How do Dealing Desks (DD) Brokers Make Money?
DD brokers make money by taking the opposite side of a client’s trade and earning the spread, or the difference between the bid and ask prices. They also have the ability to adjust the bid-ask spread in order to make a profit.
DD brokers are able to provide fixed spreads and guaranteed stop loss orders, which some traders may find more attractive than the variable spreads and potential slippage that can occur with an ECN or NDD broker.
However, this also means that the trader is not trading on the true market price and the broker has the ability to manipulate the price for their advantage.
What are Dealing Desks (DD) Brokers?
DD brokers act as a counterparty to the trades, meaning that they are on the opposite side of the trade from their clients.
They make money from the spread and have the ability to adjust the bid-ask spread, which can be an advantage or disadvantage depending on the trader’s needs and preferences.
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Fusion MarketsSince: 2017 | Offices:Australia, Vanuatu |
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FxviewSince: 2009 | Offices:EU, South Africa |
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IC MarketsSince: 2007 | Offices:Australia, Cyprus, Seychelles |
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What are No Dealing Desk (NDD)?
A No Dealing Desk (NDD) is a type of forex trading execution model used by some brokers. It is also referred to as Straight Through Processing (STP) or “Direct Market Access” (DMA).
No dealing desk brokers, as you may have guessed, do not forward their clients’ orders to a market maker or liquidity provider.
A straight-through-processing (STP) system or an Electronic Communications Network may be utilized to join two counterparties (ECN).
A STP broker routes client orders through a number of liquidity providers with access to the interbank market.
Typically, each supplier has its own set of bid/ask rates, and the STP system evaluates these prices from best to worst before the NDD broker adds a modest (usually less than a pip) markup to earn a profit. This is why the majority of STP brokers utilize variable spreads.
Meanwhile, an ECN broker facilitates trading amongst market participants. Other retail traders, hedge funds, institutions, banks, and brokers may be included among these participants.
True ECN brokers also provide a comprehensive view of where the buy and sell orders of other market participants are, allowing their clients to measure market liquidity and position.
How do No Dealing Desks (NDD) Brokers Make Money?
Typically, ECN brokers or NDD are compensated through tiny commissions rather than through spreads or markups.
In an NDD model, the broker does not act as a counterparty to the trader’s trades. It also allows for faster trade execution and more transparent pricing, since the trader is seeing the true market price.
NDD forex brokers typically charge a commission or spread markup for their services, rather than making money on the spread or by taking the other side of the trade.
This can make them more suitable for experienced traders who want more control over their trades and access to the raw market prices.
What are No Dealing Desk (NDD) Brokers?
The orders of clients of No Dealing Desk (NDD) brokers are NOT routed through a Dealing Desk. Instead, NDD forex brokers transmit buy and sell orders to the currency market immediately (via liquidity providers, banks, other brokers, etc).
For More Clarity on the Different Types of Brokers
I have created another article on the differences of the ECN Vs STP Vs Market Makers Vs DMA Broker types. Continue reading the full article and the Trading Accounts of a standard vs an STP trading account.
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Broker | Regulators | Max. Leverage | Spreads | Trading Acc. | Instruments | Connect |
 | ASIC, CySEC | Up to 1:500* | From 0.0 pips | Broker Type: STP | ECN | DMA 2 Accounts | Forex, Indices, | |
 | ASIC, VFSC | Up to 1:500 | From 0.0 pips | Broker Type: ECN 4 Accounts | Forex, Indices, | |
 | AFSL, ASIC, CySEC, FSA | Up to 1:500 | From 0.0 pips | Broker Type: | Forex, Indices, Commodities, Metals, Energies, Shares, Crypto | |
 | ASIC, VFSC, CMA, FSC | Up to 1:1000 | From 0.0 pips | Broker Type: True ECN 2 Accounts | Forex, Indices, | |
 | ASIC, VFSC | Up to 1:500 | From 0.0 pips | Broker Type: 2 Accounts | Forex, Indices, Commodities, Metals, Crypto, Shares & Bonds CFDs | |
 | CySEC, FSCA and FSC | Up to 1:1000 | From 0.0 pips | Broker Type: ECN | STP 3 Accounts | Forex, Indices, Commodities, Metals, Energies, Shares, Crypto | |
 | ASIC, FSC, FSCA, FSA | Up to 1:1000 | From 0 pips | Broker Type: ECN | STP 2 Accounts | Forex, Indices, Commodities, Metals, Energies, Shares, Crypto, ETFs | |
 | CIMA, ASIC, FCA | Up to 1:500* | From 0.4 pips | Broker Type: ECN | STP 4 Accounts | Forex, Indices, Metals, Energies, Shares, Crypto | |
 | FCA, SCA, ASIC,FSCA, FSC, FSA | Up to 1:1000* | From 0.0 pips | Broker Type: ECN | STP 5 Accounts | Forex, Indices, Metals, Energies, Shares, Crypto | |
 | HCMC / ESMA | Up to 1:500 | From 0.0 pips | Broker Type: ECN | STP 2 Accounts | Forex, Indices, Commodities, Metals, Shares CFDs, Crypto | |
 | CySEC, FSC, FSCA, ASIC | Up to 1:3000 | From 1 pip | Broker Type: ECN | STP 6 Accounts | Forex, Indices, | |
 | FMA, FSA | Up to 1:500 | From 0.0 pips | Broker Type: ECN | STP 6 Accounts | Forex, Indices, | |
 | ASIC, BaFin, CIMA, UAE VARA/SCA | Up to 1:500 | From 0.0 pips | Broker Type: ECN | STP 3 Accounts | Forex, Indices, Commodities, Metals, Energies, Shares, Crypto | |
 | ASIC,VFSC, FSC | Up to 1:500 | From 0.0 pips | Broker Type: ECN | MM 2 Accounts | Forex, Indices, | |
 | ASIC, CySEC, FSC | Up to 1:500 | From 0.0 pips | Broker Type: ECN | STP 2 Accounts | Forex, Metals, Commodities, Shares, Crypto, Bonds | |
 | CySEC, FSC, FSCA | Up to 1:2000 | From 0.0 pips | Broker Type: ECN | STP 4 Accounts | Forex, Indices, | |
 | CySEC, FCA, FSCA | Up to 1:1000 | From 0.0 pips | Broker Type: ECN | STP 5 Accounts | Forex, Indices, | |
 | AFSA, FSCA, MISA | Up to 1:1000 | From 0.0 pip | Broker Type: ECN | STP 4 Accounts | Forex, Metals, Indices, Commodities, Stocks, Crypto | |
 | FCA, FSA | Up to 1:500* | From 0.0 pips | Broker Type: ECN 2 Accounts | Forex, Indices, | |
 | ASIC, FSC, FSCA | Up to 1:1000 | From 0.0 pips | Broker Type: ECN | STP 3 Accounts | Forex, Metals, Indices, Commodities, Equities, Crypto | |
 | SVGFSA, FSC, FSA | Up to 1:500 | From 0.0 pips | Broker Type: ECN | STP 3 Accounts | Forex, Indices, | |
 | FCA, ASIC, SCA, FMA, FSC, FSA | Up to 1:500 | From 0.0 pip | Broker Type: ECN | STP 2 Accounts | Forex, Indices, Commodities, Metals, Crypto | |
 | ASIC, FSA | Up to 1:500 | From 0.0 pip | Broker Type: ECN | STP 3 Accounts | Forex, Indices, Commodities, Metals, Crypto | |
 | FCA, ASIC, CySEC, FSA | Up to 1:500 | From 0.0 pips | Broker Type: ECN | STP 6 Accounts | Forex, Indices, | |
 | CySEC, MISA | Up to 1:1000 | From 0.0 pip | Broker Type: ECN | STP 1 Accounts | Forex, Metals, Commodities, Indices, Equities, Crypto | |
 | FSC | Up to 1:2000 | From 0.0 pips | Broker Type: ECN | STP | MM 5 Accounts | Forex, Indices, | |
 | BVI FSC | Up to 1:1000 | From 0.0 pips | Broker Type: MM | ECN 6 Accounts | Forex, Indices, Commodities, Metals, Shares CFDs | |
 | CySEC, FSA, FSCA, VFSC | Up to 1:2000 | From 0.0 pips | Broker Type: STP | ECN 6 Accounts | Forex, Indices, | |
 | FSC , FSRA | Up to 1:3000 | From 0.0 pip | Broker Type: ECN | STP 3 Accounts | Forex, Metals, Indices, Crypto, Stocks CFDs | |
 | ASIC, VFSC, CySEC, FCA | Up to 1:500 | From 0.0 pip | Broker Type: ECN | STP 2 Accounts | Forex, Indices, | |
 | FINMA | Up to 1:100 | From 0.1 pip | Broker Type: ECN | STP 7 Accounts | Forex, Indices, | |
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Kevin George is an active trader of stocks, forex, commodities and crypto with over 15 years of market experience. He hold a master's degree in finance and mix microeconomic studies of company financials with a big-picture macroeconomic view.
Kevin earned a bachelor's degree from Robert Gordons University in Scotland. He returned later to earn his master's degree in finance.
Kevin has written for investopedia, Seekingalpha with his resume on Muckrack and LinkedIn