An "ECN account" is a pricing model, not proof of how your orders are filled
An electronic communication network originally meant a system that matches buy and sell orders between participants. In retail FX and CFDs, "ECN account" usually labels an account with raw spreads plus a commission. EU rules do not define that label. They require something more useful: an execution policy that lists the venues the firm relies on and says whether orders are executed outside a trading venue.
Claims such as "no dealing desk" or "no conflict of interest" cannot be read from an account name. Check the execution policy and the conflicts-of-interest summary instead.
- Who fills my order?What the execution policy must disclose
- Is commission cheaper?Total cost per lot, including swaps
- Marketing claimsWhat you can and cannot verify
- What to askCopy-ready questions
1. What an EU firm's execution policy must tell you
MiFID II Article 27 requires firms to take all sufficient steps to obtain the best possible result when executing orders; for retail clients that is measured by total consideration, meaning price plus execution costs. Article 66(3) of Delegated Regulation 2017/565 lists what clients must be told in good time before the service, including:
- (b) the execution venues the firm places significant reliance on, by class of instrument;
- (e) where applicable, that orders are executed outside a trading venue, and the consequences, such as counterparty risk;
- (f) a warning that your specific instructions may prevent the firm from following its policy;
- (g) how the firm monitors and verifies the quality of execution.
Article 64(1) includes a market maker or other liquidity provider in the meaning of "execution venue", and Article 64(4) requires firms dealing in OTC products to check the fairness of the price proposed to the client using market data.
Reading tip If the only venue listed for CFDs is the firm itself, the firm is your counterparty on every trade, whatever the account is called.
2. Total cost per lot, with an overnight hold hypothetical
Invented figures for one standard lot of EUR/USD (about $10 per pip), held for three nights.
| Account | Spread | Commission | Swap, 3 nights | Total |
|---|---|---|---|---|
| Spread-only | 1.1 pips = $11 | $0 | $18 | $29 |
| Raw spread + commission | 0.1 pips = $1 | $7 round turn | $21 | $29 |
The two accounts cost the same here because the swap difference cancels the spread saving. Compare using the spreads you actually trade at, not "from 0.0" headlines, and include swaps if you hold overnight.
3. Marketing claims against verifiable documents
| Claim | Document that can support it | If you cannot find it |
|---|---|---|
| "True ECN, direct market access" | Venue list naming external venues or liquidity providers for your instrument | Ask in writing which venue fills your account's orders |
| "No conflict of interest" | Conflicts-of-interest policy summary (MiFID II Article 23) | Treat as marketing; any firm earning spread or commission has some conflict |
| "No requotes, no slippage" | Execution policy section on slippage and price improvement | Log fills on a small live account and compare with your order prices |
For how dealing against clients is controlled, see market maker.
4. Copy-ready questions
For my [account type] account, please confirm in writing: 1. The legal entity I contract with and its regulator. 2. The execution venue(s) for my orders, and whether you act as counterparty. 3. Where I can read your execution policy and conflicts-of-interest summary. 4. Commission per lot, and average EUR/USD spread in the London session over the last three months. 5. Whether positive and negative slippage are passed on symmetrically.
5. Frequently asked questions
Is STP the same as ECN?
Both are industry labels without a separate EU definition. The venue list and counterparty disclosures are what matter.
Does MT4 or MT5 make an account ECN?
No. The platform is the order screen; execution depends on the broker's arrangements.
Do these rules apply to offshore entities?
No. They bind EU-authorised investment firms. An offshore entity may provide no execution policy at all, which is itself useful information.
Sources and open items
- Directive 2014/65/EU: Articles 23 and 27.
- Delegated Regulation (EU) 2017/565: Articles 64 and 66.