Here in the UK, forex traders have access to a wide selection of brokers offering various order execution models. One widely preferred option is the No Dealing Desk (NDD) execution, valued for its transparency and efficiency.
NDD brokers facilitate direct market access by connecting traders to liquidity providers without the intervention of a dealing desk. This setup is particularly advantageous for those seeking rapid trade execution and competitive pricing.
Axi
FxPro
Pepperstone
Eightcap
IGBelow you can find more information about the best NDD trading platforms in the UK:
- Axi, an FCA-regulated broker, provides ECN and STP order execution with zero dealing desk intervention and direct access to deep liquidity.
- FxPro operates in the UK through an FCA license as a no-dealing desk broker, offering STP order execution and direct access to interbank liquidity without requotes.
- Pepperstone, a broker regulated by the FCA, offers direct access to top-tier liquidity pools thanks to the STP/ECN order execution model, where orders are never routed to an internal dealing desk.
- Eightcap, licensed by the FCA, uses an ECN/STP order execution model with no intervention from an in-house dealing desk, ensuring all orders are routed directly to third-party liquidity providers.
- IG, an FCA-regulated broker, ensures direct market access without any dealing desk intervention, resulting in highly competitive pricing and tight spreads.
With growing interest in No Dealing Desk (NDD) brokers among UK traders, several well-established brokerage firms now offer this execution model, providing a diverse range of choices. UK traders also benefit from strong regulatory oversight, as NDD brokers operating in the UK must be authorised by the Financial Conduct Authority (FCA). This ensures compliance with strict financial regulations, fostering a fair and transparent trading environment.
In this guide, we will explore the key aspects of NDD execution and how UK forex traders can take advantage of this model for more efficient trading.
The No Dealing Desk Order Execution Model Explained
The No Dealing Desk order execution model is a system where Forex brokers act as intermediaries between traders and liquidity providers, such as banks, hedge funds, or other financial institutions. In this model, the broker does not take the opposite side of a trader’s position, unlike in the Dealing Desk (DD) model. Instead, the broker sends the trader’s order directly to the liquidity provider, who then executes the trade. This process is typically automated, allowing for fast and efficient execution of trades.
The NDD model is also beneficial for traders who use automated trading systems, such as Expert Advisors (EAs), as it allows for fast and efficient execution of trades. With the NDD model, traders can program their EAs to execute trades automatically, without worrying about the broker’s intervention. This can be particularly useful for traders who use scalping or high-frequency trading strategies, which require fast and precise execution of trades.
Furthermore, the NDD model is well-suited for traders who trade with large volumes, as it allows for efficient execution of trades without the need for manual intervention. The NDD model is also transparent, as traders can see the exact prices and execution times of their trades. UK traders who value fairness and transparency in the financial markets may also appreciate the NDD model as they can be certain the broker executes their trades fairly and efficiently, without any manipulation or intervention.
Additionally, the NDD model is well-suited for traders who use technical analysis, as it allows for fast and efficient execution of trades based on technical indicators and charts.
Differences Between No Dealing Desk and Dealing Desk Brokers
While a large number of brokers operating in the UK have adopted some form of NDD order execution, there are also some brokerages that utilize Dealing Desks to process the orders of their customers. That is why it is important that UK traders recognize the differences between various brokers and determine which one uses the order execution model they prefer.
The main difference between NDD and DD brokers lies in the way they execute trades. DD brokers, also known as market makers, take the opposite side of a trader’s position, creating a potential conflict of interest. In contrast, NDD brokers act as intermediaries, connecting traders to liquidity providers.
The following table highlights the key differences between the two models:
| Feature | Dealing Desk Brokers | No Dealing Desk Brokers |
| Order Execution | Trades are routed through an internal dealing desk; Broker takes the opposite side of the trade | Broker sends order to external liquidity providers |
| Conflict of Interest | Potential conflict of interest exists, as broker profits when clients lose; Broker acts as counterparty | No direct conflict of interest, as broker acts as intermediary |
| Execution Speed | May be slower due to manual intervention; Potential requotes | Fast and automated, with straight-through processing or electronic communication networks |
| Pricing | Broker sets the price; Fixed spreads | Price is set by liquidity provider; Spreads are variable |
| Commissions | May charge higher commissions | Typically charge lower commissions |
| Availability | Common among retail traders; Often lower minimum deposit requirements | Usually preferred by experienced traders; Higher deposit requirements may be in place |
| Liquidity | May have limited liquidity | Access to multiple liquidity providers |
| Trading Conditions | May have stricter trading conditions | More flexible trading conditions |
The differences between NDD and DD brokers are significant, and traders should carefully evaluate their options before making a decision. NDD brokers offer a range of benefits, including fast execution speeds, competitive pricing, and transparency.
However, DD brokers may offer additional services, such as market analysis and research, which can be beneficial for traders who require guidance and support. In summary, the choice between NDD and DD brokers depends on the individual trader’s needs and preferences, and UK traders should carefully evaluate their options before making a decision.
MetaTrader 4 Average Order Execution Speed
Types of No Dealing Desk Brokers
There are two main types of NDD brokers: Electronic Communication Network (ECN) brokers and Straight-Through Processing (STP) brokers. ECN brokers connect traders to a network of liquidity providers, allowing for fast and efficient execution of trades. STP brokers, on the other hand, send orders directly to a single liquidity provider, which may be a bank or a hedge fund.
Both ECN and STP brokers offer the benefits of NDD execution, including transparency and fast execution speeds. However, ECN brokers may provide traders with access to a wider range of liquidity providers, potentially leading to better pricing and execution.
STP brokers, on the other hand, may offer more flexible trading conditions and lower commissions, making them a popular choice among traders who value convenience and affordability.
The choice between ECN and STP brokers depends on the individual trader’s needs and preferences. ECN brokers offer a high level of transparency and efficiency, while STP brokers offer more flexible trading conditions and lower commissions.
UK traders should carefully evaluate their options before making a decision, considering factors such as execution speeds, pricing, and commissions. In summary, both ECN and STP brokers offer the benefits of NDD execution, and the choice between them depends on the individual trader’s needs and preferences.
Can UK Forex Traders Benefit from Trading with No Dealing Desk Brokers?
Yes, Forex traders based in the UK can benefit from trading with NDD brokers. The NDD model offers several advantages, including fast execution speeds, competitive pricing, and transparency. Additionally, NDD brokers often provide traders with access to multiple liquidity providers, which can lead to better pricing and execution.
UK traders can also benefit from the fact that NDD brokers are not taking the opposite side of their trades, eliminating potential conflicts of interest. Furthermore, many NDD brokers have obtained the FCA stamp of approval or operate under licenses from reputable authorities, such as BaFin, CySEC, and other top-tier regulators. That ensures traders are properly protected as brokers operate in accordance with strict regulatory guidelines.
While the aforementioned regulators are well-regarded, UK-based traders should prioritise firms with direct FCA authorisation, as only these firms can legally offer Forex trading services to retail clients in the UK. FCA-authorised brokers may also offer protection under the Financial Services Compensation Scheme (FSCS), which can ensure a compensation of up to £85,000 in case of broker insolvency.
UK traders can also benefit from the advanced NDD trading, which is available on popular platform solutions, which offer a range of tools and features to help traders make informed trading decisions. Platforms like MT4, MT5, and cTrade facilitate smoother trading through technical analysis, charting, and automated trading systems.
Factors to Look for When Choosing a No Dealing Desk Broker
When selecting an NDD broker, UK traders should take several key factors into account. First and foremost, it is essential to choose a broker regulated by the FCA, the UK’s primary financial regulator. FCA authorisation ensures that the broker complies with UK-specific trading guidelines, which also coincide with a large number of the European Securities and Markets Authority (ESMA) regulations. Trading with regulated brokers provides UK traders with a secure and transparent trading environment.
Another crucial consideration is the broker’s execution speed, which is largely determined by its order execution model. As mentioned earlier, both Straight Through Processing (STP) and Electronic Communication Network (ECN) brokers offer rapid trade execution.
Comparing different brokers’ platforms and execution speeds will help traders make well-informed decisions. By carefully evaluating these factors, UK traders can select a reputable NDD broker that aligns with their trading goals.
Advantages and Disadvantages of Trading with No Dealing Desk Brokers
When choosing the broker to trade with, UK traders should consider both the strengths and weaknesses of NDD brokers. Below, we have listed the advantages and disadvantages of the NDD execution model:
Advantages
- Fast and efficient execution of trades
- Competitive pricing and tight spreads
- Transparency and lack of conflict of interest
- Access to multiple liquidity providers
- Lower commissions and fees
Disadvantages
- May require higher minimum deposit requirements
- Can be more susceptible to market volatility and liquidity issues
- May not offer additional services, such as market analysis and research
- Can be more complex to understand and navigate for beginner traders
- May have stricter trading conditions and requirements
Overall, trading with an NDD broker can be a good option for traders who value transparency, speed, and competitive pricing. However, it is essential to carefully evaluate the advantages and disadvantages and consider individual trading needs and preferences before making a decision.
FAQ
How do NDD brokers handle order slippage, and what measures can UK traders take to minimize its impact?
NDD brokers typically handle order slippage by routing orders to multiple liquidity providers, which can help minimize slippage. UK traders can also use tools like stop-loss orders and limit orders to minimize slippage.
Do NDD brokers offer trading of other financial instruments, such as shares, commodities, or cryptocurrencies?
Yes, many NDD brokers offer trading in other financial instruments, such as shares, commodities, indices, or other assets. Trading CFDs on cryptocurrencies, however, is not available to retail clients registered with FCA-regulated NDD brokers.
How do UK regulatory requirements imposed by the FCA impact the operations of NDD brokers?
FCA regulations require NDD brokers to maintain transparency, fairness, and security in their operations. While the UK is no longer a member of the EU, the FCA regulations replicate many ESMA requirements, implementing mandatory measures like negative balance protection, risk management tools, and client protection to ensure compliance.
What are the differences between NDD brokers and Dark Pool operators, and how do UK traders benefit from using one over the other?
NDD brokers connect traders to liquidity providers, while Dark Pool operators match buy and sell orders anonymously. NDD brokers can offer transparency and good speed, while Dark Pools may offer better pricing and liquidity for large trades.
How do NDD brokers handle trading during times of high market volatility?
NDD brokers typically have risk management systems in place to handle high market volatility, such as widening spreads or implementing trading halts. UK traders can protect themselves by using stop-loss orders, limiting leverage, and staying informed about market developments.