Decimals, commission and market depth do not prove ECN routing. Separate counterparty roles from hedging and compare agreements, costs and execution evidence.
ECN, STP and market maker often appear side by side in advertising, but describe different things: a network, a processing workflow or a quoting/trading role. They are not ascending safety grades and do not establish which account is cheapest.
Ask two questions separately: Who is your legal counterparty, and how does the broker process or hedge risk? External hedging does not necessarily mean that you contract directly with the liquidity provider. Equally, a broker acting as counterparty does not mean every client loss equals its net profit.
| Label | Common concept | Still needs checking |
|---|---|---|
| Market maker | Quoting prices and potentially dealing as principal | Contractual role, hedging, conflicts and execution duties |
| STP | Automated straight-through processing or transmission | To whom, whether per order, and who fills the client |
| ECN | An electronic network connecting or matching orders/quotes | Whether the client accesses it directly, execution, settlement and terms |
Arrangements may be hybrid and differ by product or account. The US CFTC's retail OTC forex advisory highlights the dealer's counterparty role; it does not describe every global currency product.
A-Book, B-Book and dealing-desk terminology cannot replace the agreement. They may concern risk and internal processing. Confirm what a provider means instead of guessing its infrastructure.
More decimal places: Five-decimal EUR/USD pricing describes precision, not access to a network. Points, pips and minimum ticks also require contract definitions.
Separate commission: A fee structure is not routing evidence. Commission-free accounts may charge elsewhere; commission accounts may still mark up spreads. Check actual terms instead of assuming a universal dollar-per-lot range.
Market depth: The displayed book may represent a venue, selected sources or an aggregation method. It is not a global forex order book or a promise that all shown quantity is available to you.
Scalping or automation allowed: Strategy permissions are account terms, not sufficient proof of ECN access. Check frequency limits, latency-arbitrage clauses, rejections, amendments and erroneous-price handling.
| Document | Focus | Question |
|---|---|---|
| Client agreement | Entity and principal/agent role | Who owes contractual execution and settlement duties? |
| Execution policy | Venues, routing, size and partial fills | Which orders may execute outside a venue? |
| Conflicts disclosure | Principal activity, affiliates and fees | How are conflicts identified and managed? |
| Pricing schedule | Spread, commission, financing and conversion | What is charged beyond a raw-spread claim? |
| Order terms | Market, limit, stop, cancellation and requote | When can requests be rejected or execution changed? |
| Execution records | Times, references, fills and status | Can the provider explain an actual order? |
The UK's FCA execution rules consider price, costs, speed and likelihood among factors for applicable business. That is broader than a label, not a guarantee of a pre-observed best price for every trade. Other jurisdictions require their own rules to be checked.
Assume EUR10,000 on EUR/USD, USD1 per pip, unchanged prices across the hypothetical round trip, no slippage and no overnight charges.
Account A has a 1.0-pip spread and no separate commission: USD1. Account B has a 0.2-pip spread and USD0.60 round-trip commission: USD0.80. If B's spread at another time becomes 0.7 pip, its cost with the same commission is USD1.30.
These are invented inputs, not broker quotes. Different times do not establish long-run superiority. Calling B an ECN account would not remove changing liquidity or costs. Do not subtract spread again from actual-fill profit or loss. See the cost breakdown.
Match product, size, session and order type, and include unfilled requests. Selecting only fills hides rejections; an average alone hides the distribution and improvements. If time zones, sources or executable sizes differ, document that limitation rather than treating another chart as absolute truth.
A demo helps explain operation, not prove real liquidity. Without comparable records, leave execution quality unresolved rather than funding an account simply to reach a conclusion. Use the slippage calculations and evidence template.
For [entity, product and account type], please confirm whether you act as principal or agent, routing and venues, whether hedging changes my contractual counterparty, and your fees, conflicts, rejection, requote and price-adjustment policies. Please identify agreement versions and clauses rather than replying only with ECN/STP labels.
Resolve conflicts between advertising and the contract in writing. If identity or permissions cannot be established, address that first. An execution label does not cure missing authorisation or a clone-domain problem.
Does a market maker simply keep every client loss? That does not describe net profit: hedges, netting and fees can affect it. Examine roles and conflict management, not assumptions.
Does ECN guarantee no markup? No label alone settles that. Read pricing terms.
Must beginners choose market makers and scalpers choose ECN? There is no universal rule. Verify identity, terms and cost before using style labels to choose an account.
Does a high score plus ECN guarantee execution? Neither replaces evidence about the actual order.