Another issue is that some brokers play word games with terms like DD, NDD, STP, and ECN. I know of at least one broker with an electronic Dealing Desk that claims they are ECN, because there are some electronics involved in processing the order.
Who are they? I've seen this crap too. I finally had it out with a dude at CMS who told me the whole story. He said that many ECN brokers actually provide no more security than those with a dealing desk.
Furthermore the STP models used by dealing desks are, in my opinion, just a way for dealers to look more like ECN's because people think ECN = honest.
Reading the fine print on your contract with your broker sheds a lot of light on this subject.
To the OP: My colleagues and I have been doing a ton of research on brokers lately and quite honestly there are positives and negatives to both. What's appearing to be more important is who regulates the institution. Unfortunately most regulatory bodies have little power over what's in the fine print of your contract so ultimately you need to know what each broker is demanding when you get set up with them. I would say though, that institutions that are subdivisions of banks are usually much more secure and will be subject to stricter regulation if not by law, by reputation. SwissPB is and example of a true ECN broker in the Swiss financial scene that is is also a full-blown bank. I would love to trade with them (they also offer MT4) but due to their strict rules their spreads are unreasonable on many of my favorite pairs.
I can wander over to FXCM who have a less than perfect track-record and literally the spreads are cut in half comparied to SwissPB. But do I feel safe dealing with a company like that? (BTW my colleagues are all currently FXCM clients so I'm not trying to dog them specifically).
My point is, if you are a scalper and dealing with less than 100k, you should take a hard look at some of the more reputable dealing desk brokers. Furthermore, they often will negotiate lower spreads based on account size, volume, and trade frequency.