Discuss Hi..There is out there.. a broker that makes his "dirty job" and connect us directly to the market..

[mparama]

Fist at all sorry for my bed english...! (I'm Italien)

Its really disappointing to discover that in the "Forex World" its really difficulty for us, small retailer, and even for professional retail to pass an order directly to the market without any manipulation and intervention of third parties.
Let see the differences between brokers ( I think every trader knows it or at least should know):

- Market Makers - Dealing Desk)
- Hybrid Brokers - (Market Makers and ECN/STP)
- STP Brokers - No Dealing Desk (suppose to be !)
- ECN/STP Brokers - No Dealing Desk (suppose to be !)

MARKET MAKERS
as clearly stated they produce the market in an homemade way, it means that all the trade orders are realized inside their office and never reach the "real" market. They gain when you loose and there is an evident conflict of interest (almost the same if you are in Casino).

HYBRID BROKERS - (Market Makers and ECN/STP)
These brokers have "a-Book" and "b-Book"
It means that at their discretion divide the traders in 2 categories losers and winners.
The loser traders orders are passed to the "b-book" (Market Makers - dealing desk).
The winner traders orders are passed directly to the real markets (ECN/STP - no dealing desk).
The trader has no chance to intervene in this decision.

STP BROKERS - No Dealing Desk (STP = Straight Through Processing)
They pass the traders orders directly to the real markets (Bank, Liquid provider, other Primary brokers........)
The problem is that, even if we are in the "real market", the Liquid Provider or the Bank) have the chance of
the "last look" it means that they can excute the order or reject it or delay it (slippage) and therefore produce an intervention on the order.
So most of the time the broker is not responsible for the slippage as it is operated by the LP

ECN/STP BROKERS - No Dealing Desk (ECN = Electronic Communication Network)
When it operate as STP do the same as the above.
When it operate as ECN it connect you to the real market and to the global market in which are included all the retails (as us), brokers, Market Makers.......
How does it work:
When you make a market order it is passed to the ECN network and when your order encounter another opposite order from another retailer it is executed with almost 0 spread.
You produce a Buy order for EUR/USD if in the ECN network there is a Sell request for the same price and volume the order is executed..
The problem with ECN comes in the very volatility time, news time and when the price get steadily one direction long or short in these case most of the retailers make the same action and most request does'nt encounter an opposite, so our order is passed to the Liquid Provider that apply the "last look" which means
huge slippage, delay and high spread.

N.B.: Pay attention as some broker declair to be an ECN/STP but actually they have different office connected ECN/STP, some of these office are considered as liquid Provider and they produce their own market and in the end they are pure Market Makers

There are very few broker ECN/STP that guarantee a "NO last look" from they LP but they require a very high minumum deposit.

For us, pour traders, the life is really hard in the Forex ocean...!!!!


Any suggestions or correction for above would be really appreciate.

 

[mparama]

News about "last look"

Could last look execution in FX be banned? Not a chance. FCA wants to, but has no power and no remit

As long as the FCA has no remit over banks, absolutely nothing will change the privilege that single dealer platforms have with regard to last look execution. We examine the words of a senior FCA official alongside the industry’s standpoint.

Last look execution is a privilege which is held by the eFX desks of Tier 1 banks, and Tier 1 banks only.

Last look is a term which refers to a facility within trade execution in which banks (or non bank electronic communication networks) can pull out of trades at the last moment if the market moves against them.

For several years, this practice has been considered controversial, and central banks across the world are relatively averse to its existence, yet it continues to be part of the overall topography of institutional electronic trading at Tier 1 bank level, thus by its very standing at the very top of the trade pricing and execution structure, is a practice which filters down by default and affects all components via aggregated liquidity feeds and eventually to retail brokerages.

In May 2015, BATS Global Markets, which operates institutional multi-asset platforms and now owns major institutional ECN Hotspot FX having bought it from KCG for $365 million, began to curb the practice over a course of several weeks, placing limits on how many ‘last look’ orders could be executed in order to take its own step in increasing transparency in the non-bank FX market.

Admirable indeed, perhaps. However, although certain measures such as this have been taken by large institutional firms, EBS, the electronic brokerage division of British interdealer broker ICAP, having gone a stage further in February this year by implementing a policy which aimed to abolish the need for last look execution altogether with the launch of the firm’s new EBS Live Ultra price feed which streams real-time market data from EBS Live which is operated by the firms EBS Broker Tec division, last look is alive and well at bank level.

Whilst not a mandatory implementation, EBS stated at the time that it took this action as a result of feedback and demand from corporate clients.

This is indeed all very well, however major banks are creating a double edged sword with regard to execution and provision of Tier 1 liquidity.

Last look execution is still in widespread practice, and shows no signs of being banished to the history books of un-transparent practices.

An example of how impotent the British financial services regulators are when it comes to expressing dismay and being able to do very little about it can be found within Edwin Schooling Latter’s diatribe in November last year, when he addressed institutional delegates at a conference in London.................

 

[Etedus12]

I agree with you that it is very difficult to find a normal broker and there are not too many difficulties in the way of a trader who wants to understand everything, but it seems to me that this situation exists in any business. So, the main thing is not to give up, and everything will be fine...

 

[Muzshura]

Well, this is of course ideal...
And in practice, everything happens differently...

 

[Anakelv]

No wonder that even regulation today is not at least some guarantee, at each stage you can rely only on yourself and your knowledge, which helps you to determine the best solution!

 

[Vo32ss]

This is part of our job - to find the conditions that will meet the standards and help us in our daily work so that we can achieve our goals and earn as much as necessary.