Should You Consider Using A Forex ECN Platform? - MB Trading
Should You Consider Using A Forex ECN Platform? - MB Trading
Should You Consider Using A Forex ECN Platform? - MB Trading
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RETAIL e-FX CLIENT >>><br />
because it requires advanced requirements in terms of<br />
technology, an excellent IT infrastructure and can bear<br />
high development costs, he adds.<br />
Vladimir Kisyov<br />
“The <strong>ECN</strong> environment allows clients’ orders to interact<br />
with other clients’ orders. All trade orders are matched<br />
between counterparties in real time.”<br />
is the answer to the growing number of FX traders<br />
demanding more transparent and fair pricing.<br />
He comments: “Retail <strong>Forex</strong> is today a mature product<br />
and traders understand its logistics (including the fact<br />
that pricing and trades are often handled in a market<br />
making environment). While there are still a few<br />
brokers using ambiguous statements about the nature<br />
of their retail forex system, most brokers are now<br />
offering a variety of trading environments to satisfy<br />
the growing demand of alternative products, often in<br />
place of the classic dealing desk.”<br />
Changing expectations<br />
“Today, we see a significant change in terms of<br />
clients’ expectations,” Vedikhin points out. “Clients<br />
from all backgrounds, including retail, are becoming<br />
increasingly demanding with regard to the suite of<br />
services they are being offered by their broker. All<br />
traders are now requesting institutional-level execution<br />
speeds, and NDD execution helps us to deliver on<br />
that. While approximately only 5% of retail clients<br />
trade via <strong>ECN</strong>s today, we expect this to grow to over<br />
95% within the next few years. The benefits of <strong>ECN</strong><br />
trading, including transparency, deep liquidity, market<br />
depth and NDD execution, will then become available<br />
to everyone.”<br />
On brokers offering both DD and NDD FX trading<br />
facilities, Kisyov says the number of NDD FX trading<br />
facilities (either STP or <strong>ECN</strong>-STP brokers) has<br />
notably increased in the last couple of years or so. He<br />
comments: “The shift from the DD to NDD business<br />
model has accurately addressed the growing needs of the<br />
forex trading community for greater liquidity and best<br />
execution, thus explaining the major migration of retail<br />
clients from MMs to <strong>ECN</strong>-STP brokers. Nonetheless,<br />
the DD model still provides advantages to traders.”<br />
“The logical consequence has been to see brokers<br />
offering an <strong>ECN</strong>-style environment. However,<br />
few brokers really allow their clients to trade these<br />
products, but simply made a major switch from the<br />
‘fixed’ spread model to a ‘floating’ spread pricing<br />
which they marketed as a ‘NDD’ or ‘multi bank’ feed.<br />
Unfortunately these are merely DD-based systems<br />
which simulate or replicate the floating bid and ask of<br />
a true <strong>ECN</strong> model, but execute orders on a DD basis,”<br />
states Zagara.<br />
Andrey Vedikhin, CEO of Alpari (UK), agrees that<br />
most brokers would like to be in a position to offer<br />
NDD execution because it allows for a much greater<br />
level of automation when matching trades. However,<br />
NDD execution is relatively difficult to achieve<br />
Giuseppe Zagara<br />
“..most brokers are now offering a variety of trading<br />
environments to satisfy the growing demand of alternative<br />
products, often in place of the classic dealing desk.”<br />
126 | april 2010 e-FOREX