Broker Challenge quotNDD/STPquot vs. True quotECNquot and quotMkt Mkrquot broker talk

Deltastock: fx spot is not a derivative contract.

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Originally Posted by ;

Deltastock: fx spot is not a derivative contract.

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We also wish that this is true. However in the event that you have the opportunity to check the sites of several EU based brokers including Deltastock, regulated by MiFID, you may see this in order to legally offer Forex in other EU nations they need to take action in the form of CFD contracts. CFDs are OTC derivatives based on this Proposal in regards to the EP we quoted previously.

Regards,
Deltastock

There seems to be confusion about that. Im contending with the taxation authorities at the moment just about this (because of recent change in local legislation). I would get favourable tax-treatment if it had been a derivative deal - however they insist that ISDA-governed spot forex trades is spot-trading - comparable to stock-trading - and - consequently im out of luck.

Its of course never out of the question which the regulator and taxation police have contradicting standpoints.

Supplying such incorrect information in this thread... (closes door and leaves)

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and who is going to give the liquidity? Market maker appears to be a bad word now, but when there aren't market maker who is going to offer the liquidity. ? If you are placing order on NDD broker which is passing to a prime broker wich execute with a tier 1 bank. Is the grade 1 bank not a market maker?

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That is exactly what they said about shares in the mid 1990s. The market makers need to be there to offer liquidity to the market.

Until they did not and the ECNs dominated. Only a matter of time , probably 2-3 decades.

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Originally Posted by ;

THese phrases are in SPECIFIC order for a reason. After the definitions are read, (I WELCOME any correction or improvement ) You will likely know MY aforementioned issue.

OK so - NDD/STP - two kind of redundant, yet different, and somewhat conflicting terms.
The No Dealing Desk version, asserts exactly that - your orders are not immediately accepted by the bargain desk in the other side of the commerce. ( ie: I sell EUR/USD deal desk buys)

The promise as I know it is as follows:
Trader X opens platform to do order of Ask(long) one lot EUR/USD...

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Thank you for your research and explanation about NDD. They are really good.

I totally agree with you that NDD is completely redundant once you have STP and not just that but also very ineffective. Why have the broker go back and forth present your order to the counter-party then transmit the counterparty's order back to you if they're able to just transmit your order right to the counterparty and vice versa through STP and just collect the commission once the trades take place? step in between? What are they really doing when stepping between you and the counterparties? How can they get from? These will be the questions that have to be answered by those NDD's.

And lastly, make no mistake about it. NDD's are still MM's. They are NOT ECN's. They attempt to distinguish themselves from MM's however they are NOT ECN's. FXCM made that quite clear to me when I asked them specifically if they are an ECN. They kept highlighting to me that they are NDD's and they don't take the other side of our transactions but once I asked them to confirm if they are ECN'sthey advised me No, they are still MM. So for all those people crying wolf around FXCM, they know what they are getting into.

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Originally Posted by ;

There appears to be confusion about that. Im arguing with the tax authorities in the moment just about this (due to a recent change in local legislation). I would get favourable tax-treatment if it were a derivative deal - however they insist that ISDA-governed spot forex contracts is spot-trading - akin to stock-trading - and - therefore im out of luck.

Its of course never from the question that the regulator and tax authorities have contradicting standpoints.

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Well, they have to be contracting each other in order to squeeze more tax dollars from you. But what it is you are arguing are legitimate points. Retail Forex is considered derivative products because how the foreign exchange contracts just roll forwards rather than actually settle and that's the debate that CFTC utilized to enlarge their jurisdiction over Retail Forex trading as part of the Farm Bill. Therefore if it's considered a derivative solution, then you should be qualified for the favourable tax treatment. They can not rule you from a single class when it comes to collecting taxes and include you into precisely the same class when it comes watching over our shoulders.

You can find the CFTC Farm Bill debate in a few of the threads here. Fantastic luck! I hope you qualify.

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Originally Posted by ;

That is what they said about shares in the mid 1990s. The market makers need to be there to provide liquidity to the market.

Until they didn't and the ECNs dominated. Only a matter of time , probably 2-3 years.

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I understand what you're saying but you don't get my point.
I an ECN anyone who is offering the liquidity and take another side of a trade is a market maker.
The standard of an ecn only depends upon the ammount of liquidity that is present on the system.

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The quality of an ecn only depends on the ammount of liquidity which is present on the network.

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Good stage, however the only real liquidity on the typical ECN is that which is posted by clients.

With that said, the ECN egory should really be broken into two sub-egories:

ECN-STP (IB, MBT, Duka, Delta, FXCM AT, all Currenex brokers, etc)
Actual ECNs (CME, Hotspot, etc)

In the first egory, the ECN is primarily an aggregator of outside LP quotes, client orders are STP'd to the LPs, giving the LPs the right to accept/deny ('last appearance'). The liquidity exhibited in every one of those ECNs is therefore a bit of a mirage, the LPs are not on the hook for implementation.

The next group are marketplaces with actual live liquidity on the book (WYSIWYG, instant execution, no STP roundtrip, no'last appearance').

Edit - that is not to imply the very first egory is unsuited for retail traders. I use them, and for most they are perfectly fine the preferable route. LPs are algo-driven, their quotes would not be posted if they are not ready to execute 99% of the time (they are in the flow company after all).

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Really? You think it? They were making it fine though until they decided to go institutional and I hardly doubt that they would have difficulty making that requirement each year. They offered great and, like you mentioned, reliable service. I had been thinking it was a profitability issue. They just wanted to earn more money and they were't pleased with the amount that they were making with us retail traders.

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It may not have been the 20M internet cap, but the timing of this sale/closure was appropriate in accore with the internet cap requirement. It was either purely coincidental, or to a degree connected. Though accurate, a company such as theirs could have have little difficulty posting it (heck, Advanced Markets articles it, and they'd all of 58 total US clients http://forexmagnates.com/us-forex-br...q4-2010-final/. .)

The cash in retail can be quite good, and they were executing fine (lower rates than MBT). Hard to say if this had been a lack of profitability concern. Maybe FXCM simply gave them a very sweetheart deal seeking to bulk up total clients pre-IPO (they accepted on most of ATC's clients in the process).