ECN vs STP vs Market Maker: How Broker Types Affect Execution and Costs
BY TIOmarkets
|March 24, 2026When comparing forex brokers, you will frequently encounter three terms: ECN, STP, and market maker. These refer to different models for how a broker handles your orders, where prices come from, and how the broker earns its revenue.
Understanding the differences matters because each model has distinct implications for spreads, execution quality, cost structure, and potential conflicts of interest between broker and client. This guide explains how each model works and what the practical differences mean for your trading.
What Is a Market Maker Broker?
A market maker is a broker that stands ready to take the opposite side of client trades. When you buy, the market maker sells to you. When you sell, the market maker buys from you. Rather than routing orders to external liquidity providers, the broker internalises trades within its own dealing desk.
Market makers quote their own bid and ask prices. The difference between these two prices, the bid/ask spread, is the primary source of the broker's revenue. By setting prices slightly in its favour, the broker profits from the spread on every completed trade.
This model has a specific implication worth understanding: when you profit on a trade, the broker takes a loss on that position, and vice versa. This creates a structural tension between the broker's short-term financial interests and client profitability. Well-regulated market makers manage this through risk management practices and by hedging net exposure in the broader market, but the tension exists in principle.
Market makers also play a role in providing liquidity. They are continuously willing to quote prices and execute trades even during low-volume periods when external liquidity might be thin. This can be an advantage for traders who need execution in less liquid instruments or at off-peak hours.
The pricing in a market maker model tends to incorporate a spread markup. Minimum spreads are typically wider than in raw spread models, but there is no separate commission charge. For traders with lower volume, longer holding periods, or less sensitivity to small differences in spread, the all-in cost can be straightforward to calculate.
What Is an STP Broker?
STP stands for Straight-Through Processing. An STP broker routes client orders directly to external liquidity providers, such as banks and financial institutions, without a dealing desk intervening to process trades internally.
In an STP model, orders pass from the client through the broker's system and on to the liquidity pool for execution. The broker does not take the other side of the trade. Instead, it earns revenue by applying a markup to the spread received from liquidity providers, by charging a commission, or through a combination of both.
Because orders are processed automatically without dealer intervention, STP execution tends to be faster than a traditional dealing desk model. The absence of internal trade handling also reduces certain conflicts of interest, since the broker is not directly profiting from client losses in the same way a market maker does.
STP pricing reflects market conditions more closely than a dealing desk model, though the markup applied by the broker means the client does not necessarily see raw interbank pricing. The degree of transparency depends on how much markup the broker adds and how it structures its fee model.
STP is sometimes described as a form of non-dealing desk (NDD) execution, a category that also includes ECN models. The two are related but not identical.
What Is an ECN Broker?
ECN stands for Electronic Communications Network. An ECN broker connects traders directly to a network of liquidity providers, which may include banks, other brokers, institutional participants, and in some cases other retail traders, creating a pool of competing bid and ask prices.
Rather than applying a spread markup, an ECN broker passes the raw interbank spread from the liquidity pool directly to the client and charges a fixed commission per trade. This commission covers both the opening and closing of the position and is charged when the trade is opened.
The key characteristic of ECN pricing is that spreads reflect real market conditions sourced from multiple competing liquidity providers. On major pairs during periods of high liquidity, ECN spreads can reach 0.0 pips or very close to it. However, spreads still widen during major news events, around market opens and closes, and in low-liquidity conditions.
Because the broker earns through commission rather than spread markup, the commercial structure of ECN execution creates less direct conflict between broker revenue and client trading outcomes. The broker's revenue does not depend on the size of the spread at execution.
ECN execution is a form of non-dealing desk (NDD) processing. Orders are passed to the liquidity network for matching rather than handled internally by the broker. Orders are executed at the best available market price, which may result in positive or negative slippage during volatile market conditions.
It is worth noting that the terms ECN, STP, and NDD are sometimes used interchangeably in broker marketing. What matters practically is whether spreads are genuinely sourced from external liquidity providers, whether execution is automated without dealing desk intervention, and what the total cost of trading looks like when spread and commission are combined.
ECN vs STP: What Is the Difference?
STP and ECN are both forms of non-dealing desk execution, but there are meaningful differences.
An STP broker routes orders to external liquidity providers and earns through a spread markup, a commission, or both. The client sees prices that reflect market conditions with a markup applied, and execution is automated.
An ECN broker connects to a broader network of liquidity providers, passes the raw spread with no markup, and charges a fixed commission instead. Pricing tends to be more transparent because the spread is not artificially widened, and the commission is the explicit and identifiable cost.
In practice, the difference often comes down to pricing transparency. STP can describe a broad range of execution models including those with significant spread markup. ECN, in its fuller sense, implies access to raw pricing with commission as the sole trading cost beyond the market spread. The underlying liquidity pool, the number of competing providers, and the degree of spread transparency differ across brokers even within these categories.
For traders, the practical question is: what is the all-in cost, how is it structured, and does the execution model align with the type of trading being done?
How the Models Compare: Cost Structure and Execution
The three models differ primarily in how costs are structured and how orders are handled.
In a market maker model, the spread includes the broker's margin. There is no separate commission, and the all-in cost is the spread paid at execution. Execution is handled internally by a dealing desk or automated dealing system.
In an STP model, orders are routed to external providers. The spread may include a markup. Some STP brokers also charge commission. Execution is automated and faster than a manual dealing desk.
In an ECN model, the spread is sourced directly from liquidity providers with no markup. A fixed commission is charged per round turn lot. The commission is charged at the point of opening the trade and covers both the open and close. Execution is non-dealing desk, automated, and reflects real-time market pricing from the liquidity network.
The total cost of any trade is the sum of the spread at execution plus any commission. On a raw spread account where EURUSD is quoted at 0.2 pips, a 1.0 standard lot trade on a USD account would carry a spread cost of approximately $2 plus the per-lot commission. Understanding this combined cost, rather than focusing only on the advertised minimum spread, is essential when comparing account types.
Who Benefits Most from Each Model?
The right model depends on how you trade.
Market maker and standard spread accounts tend to work well for traders who hold positions for extended periods, trade at lower volume, or whose strategy is not sensitive to small differences in entry and exit price. The all-in cost is contained in the spread, there is no commission to factor, and execution is predictable under normal conditions.
STP execution offers faster processing than a traditional dealing desk and pricing that reflects market conditions more directly. It suits traders who want non-dealing desk execution without necessarily needing the tightest raw spreads.
ECN and raw spread pricing benefits traders who execute frequently, scalp small price movements, run algorithmic or expert advisor strategies, or trade large volumes where small differences in spread cost per lot accumulate meaningfully. With a fixed, predictable commission and tight spreads during liquid hours, the per-trade cost structure is transparent and manageable at scale.
Spreads During News Events
Regardless of the broker model, spreads widen during high-impact news events, at market opens and closes, and during periods of low liquidity. This applies to all three execution types.
For ECN accounts, where spreads are passed directly from the liquidity pool, this widening reflects genuine market conditions. When liquidity providers widen their quotes, those wider prices reach the trader directly. For market maker accounts, the broker may apply additional widening on top of market conditions.
If you trade around news events, it is worth checking whether any trading restrictions apply at specific times. On certain account types or leverage configurations, specific margin requirements may apply during defined windows around high-impact releases.
Trading ECN at TIOmarkets
TIOmarkets offers a Raw account that operates on a raw spread, commission-based model. Spreads start from 0.0 pips, sourced from multiple liquidity providers. The commission is $6 per round turn lot, charged when the position is opened, and covers both the open and the close of the trade. The minimum deposit for the Raw account is $250 or currency equivalent. Leverage on the Raw account is up to 1:500 on request. The Raw account is available on both MT4 and MT5, with a minimum lot size of 0.01 lots.
The Raw account sits alongside the Standard account, which carries spreads from 1.1 pips with no commission and a $20 minimum deposit, and the VIP Black account, which carries spreads from 0.3 pips with no commission and a $1,000 minimum deposit. All accounts support hedging and are available on MT4 and MT5. A Standard account is created automatically on registration. Raw and VIP Black accounts must be opened separately via the client area.
Spreads on all accounts are variable and typically higher than the minimum figures shown. Subject to change depending on market conditions and applicable regulatory requirements. Orders are executed at the best available market price, which may result in positive or negative slippage.
A swap-free Islamic account is available. Contact TIOmarkets for eligibility requirements and instrument availability. Copy trading is also available, allowing followers to copy strategy providers in real time across MT4 and MT5.
FAQ
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