Execution model describes what happens to your order after you click. A market maker quotes its own prices and takes the other side of your trade. An STP (straight-through processing) broker passes orders on to liquidity providers such as banks. An ECN (electronic communication network) model places orders into a pool where many participants quote against each other, usually with a tighter spread and a separate commission. Many brokers use a mix.
Key takeaways
- Market maker: the broker is your counterparty and sets its own quotes.
- STP: orders are routed to one or more liquidity providers.
- ECN: orders meet a pool of competing quotes; spreads are raw and a commission is charged.
- Hybrid models are common: some flow is internalised, some passed on.
- The model is described in the broker’s order execution policy.
| Market maker | Broker takes the other side; fixed or wider spreads |
|---|---|
| STP | Routed to liquidity providers; variable spreads |
| ECN | Competing quotes in a pool; raw spread plus commission |
| Hybrid | Mix, by instrument or trade size |
| At Marketsall | Described in the Marketsall order execution policy |
Where your order goes
| Feature | Market maker | STP | ECN |
|---|---|---|---|
| Counterparty | The broker | Liquidity provider, via the broker | Other participants in the network |
| Spread | Often fixed or wider | Variable, with a markup | Raw, often very tight |
| Commission | Usually none | Usually none | Yes, per lot |
| Requotes | Possible on instant execution | Rare | Rare |
| Slippage | Depends on policy | Both directions | Both directions |
| Conflict of interest | Present; must be managed | Lower | Lower |
| Typical client | Small sizes, simple pricing | Most retail traders | Frequent and larger traders |
The conflict-of-interest question
When a broker takes the other side of a client trade, the client’s loss is the broker’s gain. That does not mean prices are unfair: a licensed market maker must quote prices in line with the wider market and follow its execution policy. But it is a conflict, and it has to be managed and disclosed. STP and ECN reduce it because the broker earns per trade rather than from outcomes. The income side is explained in how CFD brokers make money.
What you notice as a trader
| What you see | More typical of |
|---|---|
| Spread that stays the same in quiet and busy markets | Market maker with fixed spreads |
| Spread that widens around news and at the rollover | STP and ECN |
| A requote instead of a fill | Instant execution, often market makers |
| Fills away from the requested price in fast markets | Market execution: STP and ECN; see why your order filled at another price |
| A separate commission line in history | ECN-style accounts |
How to find out a broker’s model
- Read the order execution policy. It states how orders are executed, which venues or counterparties are used, and how conflicts are handled.
- Check the execution type in MT5. The symbol specification shows market or instant execution; see contract specifications.
- Look at the pricing structure. Raw spreads plus commission usually indicate an ECN-style account.
- Ask support directly. A licensed broker should be able to explain its model in plain terms.
The model is one factor among many. Total cost, reliability of fills and the protections that apply to your account matter as much; see Marketsall account types compared and FSC Mauritius licence explained.
Common mistakes to avoid
Choosing on labels alone. “ECN” is used loosely in marketing; read the execution policy.
Ignoring commission on raw-spread accounts. Compare total cost per round turn.
Assuming one model everywhere. Brokers can use different routes for different instruments.
Expecting no slippage. Market execution fills at the available price.
Risk warning. Trading CFDs carries a high level of risk since leverage can work both to your advantage and disadvantage. As a result, the products offered on this website may not be suitable for all investors because of the risk of losing all of your invested capital. You should never invest money that you cannot afford to lose, and never trade with borrowed money.
Frequently asked questions
What is the difference between ECN, STP and market maker?
A market maker takes the other side of client trades and sets its own prices. An STP broker passes orders to liquidity providers. An ECN model places orders into a network of competing quotes, usually with raw spreads and a commission.
Is a market maker broker bad?
Not in itself. A licensed market maker must quote fair prices and follow its execution policy. The model does create a conflict of interest, which must be managed and disclosed.
Do ECN brokers have lower costs?
They usually have tighter spreads but charge a commission. Whether the total is lower depends on your trade size and frequency, so compare spread plus commission per round turn.
What is a hybrid broker?
A broker that uses more than one model, for example internalising some client trades and passing others to liquidity providers, depending on the instrument, size or conditions.
How do I know how my broker executes orders?
Read its order execution policy, check the execution type in the MT5 symbol specification and ask support to explain the model.
Related reading
Put a money figure on each trade
Convert the quoted spread into money with the formula in what is a spread and add the commission and swap columns from your MT5 trade history; the sum is what one trade actually cost, whatever model sits behind it.
Register