Dealing Desk vs No Dealing Desk: Which Broker Model is Best?

In the world of forex and CFD trading, choosing the right broker is a critical decision that can significantly impact a trader’s experience. One of the most important factors to consider when selecting a broker is their operational model. Specifically, brokers can either operate as a Dealing Desk or a No Dealing Desk broker. 

These two models represent different approaches to how trades are executed, how prices are provided, and how the broker interacts with the market. Understanding the differences between Dealing Desk and No Dealing Desk brokers is essential for traders to make informed decisions that align with their trading style, goals, and risk tolerance. 

In this article, we will pit dealing desk vs no-dealing brokers against each other, exploring how each model works. We will also evaluate the potential advantages and drawbacks of each of these models. By the end, you will have a better understanding of which broker model is best for your trading needs.

What Is a Dealing Desk Broker?

A Dealing Desk (DD) broker is a type of broker that takes the opposite side of a client’s trade. When a trader places an order, the broker may choose to offset it internally by matching it with another client's order or take the position against you directly. 

These brokers set both the bid and ask prices at which they are willing to buy and sell currency pairs. The prices they set may differ slightly from the interbank market prices. An example of dealing desk brokers is market makers that provide liquidity in the market by quoting bid and ask prices.

Key Features of Dealing Desk Brokers

The key characteristic of a Dealing Desk broker is the internalisation of client orders. Instead of passing every client order to the interbank market, the dealing desk attempts to fulfil orders internally. As mentioned, Dealing Desk brokers control the bid and ask prices they display to their clients. While these prices are derived from the underlying interbank market, the broker can add a markup or adjust them slightly to manage their risk and generate profit. This often results in fixed spreads, which remain constant regardless of market volatility.

Since the broker acts as the counterparty, it inherently takes on the risk of client trades. To mitigate this risk, they employ various strategies. For example, they might hedge their exposure in the interbank market when there's an imbalance of buy or sell orders.

Further, Dealing Desk brokers primarily profit from the spread they charge on trades. However, because they are the counterparty, they can also profit when their clients lose money on their trades. This is often the source of concern regarding a potential conflict of interest.

Advantages of Dealing Desk Brokers

• Fixed Spreads - Since brokers set their own bid and ask prices, they are able to provide fixed spreads. This means the cost of trading remains constant, providing predictability, provided there are no hidden fees.
• Guaranteed Fills - In many cases, Dealing Desk brokers can offer guaranteed fills on orders, especially for smaller trade sizes. This remains the case even in volatile market conditions. This is because they are providing the liquidity themselves.
• Simpler for New Traders - The straightforward pricing and execution model can be less intimidating for aspiring traders who are still learning the ropes of forex trading.
• No Requotes - Some Dealing Desk brokers ensure no requotes, providing a smoother trading experience during volatile periods.

Disadvantages of Dealing Desk Brokers

• Potential Conflict of Interest - The most significant concern with Dealing Desk brokers is the inherent conflict of interest. Since the broker profits when clients lose, there's a theoretical incentive for them to manipulate prices or widen spreads to their advantage. Reputable and regulated brokers, however, are legally bound to act fairly and transparently.
• Less Transparent Pricing - The prices offered by a DD broker are not the raw interbank market prices. They are typically marked up, meaning traders may not get the absolute tightest spreads available in the market.

Who Are Dealing Desk Brokers Best Suited For? - While dealing desk brokers can serve all kinds of traders, they are best suited for new and casual traders who prioritise simplicity and instant execution. The internal execution and simpler pricing model of a dealing desk can be less intimidating than the complexities of direct market access offered by No Dealing Desk (NDD) brokers.

Examples of Dealing Desk Brokers

XM

XM is a well-known market maker broker that runs its own dealing desk, meaning it sets its own bid and ask prices. This broker serves global clients with a collection of over 1,400 different CFDs on forex, equity indices, shares, cryptocurrencies, commodities, metals, stocks, and energies. Traders can access these markets through trading platforms like MetaTrader 4, MetaTrader 5, and XM's proprietary trading app.

XM provides competitive spreads across three account types. The Standard account features spreads starting at 1.6 pips for major currency pairs with no commissions. In contrast, the XM Ultra Low account offers even tighter spreads from 0.8 pips, also commission-free. The Shares account, however, charges a commission based on the share traded and trade size.

Further, XM operates under the strict supervision of several financial regulators. These include the CySEC in Cyprus, the DFSA in the DIFC, and the FSC in Belize.

74.3% of retail investor accounts lose money when trading CFDs with this provider.

XTB

XTB is another reputable dealing desk broker recognised for its user-friendly platform and competitive spreads. As a market maker, it sets its own bid and ask prices. The broker offers a broad range of financial instruments, including CFDs on forex, commodities, cryptocurrencies, indices, stocks, and ETFs. In addition to CFDs, XTB also gives clients access to real stocks and ETFs as underlying assets.

One of XTB’s standout features is its proprietary trading platform, xStation 5. This platform delivers an intuitive interface, advanced charting, and real-time performance analytics. When it comes to spreads, XTB offers competitive rates. Its standard account features tight spreads starting from 0.8 pips on major currency pairs, with no commission fees.

Finally, XTB operates under strict regulation from multiple authorities. These include the CySeC in Cyprus, the FCA in the UK, the KNF in Poland, and the FSC in Belize.

69-80% of retail investor accounts lose money when trading CFDs with this provider.

What is a No Dealing Desk Broker?

No Dealing Desk (NDD) brokers, as the name suggests, do not pass client orders through a dealing desk. Instead, they act as facilitators. They connect traders directly to the interbank market or to multiple liquidity providers. There are two main types of NDD brokers: Straight Through Processing (STP) and Electronic Communication Network (ECN) brokers.

Straight Through Processing (STP) Brokers

STP brokers route all client orders directly to their liquidity providers (LPs), which can include banks, other brokers, or financial institutions. The broker may then add a small markup to the spread they receive from their LPs. This markup constitutes their profit. There is no manual intervention from a dealing desk. 

Electronic Communication Network (ECN) Brokers

ECN brokers operate the no-dealing desk model by providing direct access to an Electronic Communication Network. This network aggregates prices from multiple market participants, including banks, hedge funds, and other traders. This creates a highly transparent and competitive trading environment. ECN brokers usually charge a commission per trade instead of a markup on the spread, offering raw interbank spreads.

Key Features of No-Dealing-Desk Brokers

No Dealing Desk brokers provide you with raw, unfiltered bid and ask prices from multiple liquidity providers in the interbank market. Positively, these brokers usually offer extremely tight, raw spreads directly from the liquidity providers. These spreads can be as low as 0.0 pips for major currency pairs during liquid market hours. A crucial aspect is that these spreads are variable. They fluctuate based on market liquidity, volatility, and time of day.

With NDD brokers, orders are typically executed automatically and instantaneously, without manual intervention from a dealing desk. Further, these brokers typically feature deep liquidity. Their networks of liquidity providers ensure a deep pool of available liquidity. This means that even large trade orders can be filled efficiently without significant price impact.

Advantages of No-Dealing-Desk Brokers

• No Conflict of Interest - No Dealing Desk brokers don't act as market makers, meaning they don't take the opposite side of your trades. Their profit comes from either a small commission per trade or a slight markup on the spread. This eliminates the conflict of interest often associated with dealing desk brokers.
• Access to Raw Market Spreads- NDD brokers typically offer tighter, variable spreads that reflect the true interbank market prices. Orders are filled directly by liquidity providers based on real market conditions. This can lead to lower overall trading costs, particularly for high-volume traders.
• Faster Execution - Orders are sent directly to liquidity providers for execution, often resulting in very fast execution speeds. This is critical for scalpers and other high-frequency traders.
• No Requotes - Because trades aren’t filtered through a dealing desk, prices generally won’t get requoted even in fast-moving markets.
• Deeper Liquidity - NDD brokers connect to multiple liquidity providers, offering a deeper pool of liquidity. This can lead to better pricing and the ability to execute larger trades efficiently.

Disadvantages of No-Dealing-Desk Brokers

• Variable Spreads - While NDD brokers offer tighter spreads, they are often variable. This means the spread can widen significantly during times of high volatility, major news events, or low liquidity. This makes trading costs less predictable.
• Commissions (Especially with ECN) - No dealing desk brokers typically charge a commission per lot traded, in addition to the spread. While the raw spreads are very tight, the commission adds to the overall trading cost.
• Complex for New Traders - The concept of variable spreads, commissions, and direct market access can be more complex for new traders to grasp compared to the simpler fixed-spread model of dealing desk brokers.

Who Are No Dealing Desk Brokers Best Suited For? - NDD brokers are generally favoured by experienced traders, scalpers, and those who prioritise transparency, direct market access, and potentially lower overall trading costs. 

Examples of No Dealing Desk Brokers

Pepperstone

Pepperstone is a respected no-dealing-desk broker utilising an ECN model. This means Pepperstone doesn't run its own dealing desk. Instead, it sources its pricing directly from a diverse network of top-tier banks and financial institutions.

The broker offers two primary account types, which include the Standard and the Razor accounts. The Standard account features spreads starting at 1.0 pips with no commissions. Conversely, the Razor account provides spreads from 0.0 pips but charges a commission based on the trading platform. 

For MetaTrader 4 and MetaTrader 5, commissions are $3.5, €2.6, £2.25, or CHF 3.3 per side per lot, depending on the account currency. TradingView and the Pepperstone Trading Platform charge $3.5 per side per lot. Meanwhile, cTrader charges $3.0 per side per lot. For non-USD accounts on TradingView, cTrader, and the Pepperstone platform, commissions are converted to the account’s currency using the current spot exchange rate.

This broker offers trading in a variety of market products totalling over 1,400 instruments. These include CFDs on forex, indices, commodities, cryptocurrencies, currency indices, stocks, and ETFs. On another note, Pepperstone is tightly regulated, holding licenses from several authorities. These include the FCA in the UK, the ASIC in Australia, the CySEC in Cyprus, the BaFin in Germany, and the CMA in Kenya, among others.

73.7% of retail CFD accounts lose money

FP Markets

FP Markets is another recognised no-dealing desk broker that serves global clients. It operates using an ECN execution model, meaning there is no dealing desk involved. Instead, the broker connects traders directly to its liquidity providers through its ECN. FP Markets offers two account types, which include the standard and the raw accounts.

The Standard account provides spreads starting at 1.0 pips for major currency pairs with no commissions. However, features spreads from 0.0 pips for major pairs, with a commission of $3 per side per lot. Traders have access to an extensive range of over 10,000 instruments. These include CFDs on forex, indices, metals, commodities, stocks, bonds, and ETFs. These can be traded on platforms such as MetaTrader 4, MetaTrader 5, cTrader, and TradingView.

Finally, FP Markets is tightly regulated across multiple jurisdictions. These include the ASIC in Australia, the CySEC in Cyprus, the FSCA in South Africa, and the CMA in Kenya, among others.

74.73% of retail CFD accounts lose money

Which Broker Model Is Best for You?

Choosing between a Dealing Desk (DD) and a No Dealing Desk (NDD) broker ultimately depends on your trading goals, experience level, and preferences regarding pricing and execution. If you’re a beginner or casual trader, a Dealing Desk broker might be a better fit. Their fixed spreads, simpler pricing models, and often guaranteed execution can make trading less intimidating. This environment offers predictability, especially for those still learning the market’s dynamics.

On the other hand, experienced traders, scalpers, or those who value tight spreads and direct market access may find an NDD broker to be a better choice. With faster execution, variable raw spreads, and no inherent conflict of interest, NDD brokers offer the transparency and responsiveness that active traders demand. 

It’s also worth considering that some brokers, like Exness, offer hybrid models, combining features of both DD and NDD setups. The best approach is to test the broker’s platform with a demo account and review their fee structures, execution speed, regulation, and available instruments before committing to a live account.

Final Comments

Choosing between a Dealing Desk (DD) and a No Dealing Desk (NDD) broker is a pivotal decision for any forex or CFD trader. The decision ultimately comes down to your trading goals, experience level, and preferred pricing models. Both models offer distinct advantages and come with their own sets of drawbacks.

Dealing Desk brokers, like XM and XTB, offer a simplified, predictable trading environment with fixed spreads and often guaranteed order execution. On the other hand, No Dealing Desk brokers, such as Pepperstone and FP Markets, provide direct access to raw market pricing, tighter spreads, and faster execution.

The main thing is to understand the operational mechanisms, advantages, and disadvantages of each model. That way, traders can make an informed decision that aligns with their trading style, risk tolerance, and long-term financial goals.