STP (Straight Through Processing), ECN (Electronic Communication Network), and DMA (Direct Market Access) are three execution models that describe how forex brokers route and process client orders. STP brokers automatically pass orders directly to liquidity providers without manual intervention or dealing desk interference.
STP, ECN, and DMA execution models enable forex brokers to route client orders directly to liquidity providers without manual dealing desk intervention.
ECN brokers connect traders to a network where multiple market participants—banks, institutions, and other traders—submit competing bids and offers, creating a marketplace environment.
DMA execution gives traders direct access to interbank markets or liquidity pools, allowing them to see real market depth and place orders directly into the orderbook.
These models contrast with market maker brokers who take the opposite side of client trades. The key distinction is that dealing desk brokers act as counterparties to client positions, while no dealing desk brokers route orders directly to external liquidity providers. Many modern brokers combine these technologies, offering hybrid execution that routes orders through multiple channels to achieve optimal pricing and speed. Understanding the differences between ECN, STP, and Market Maker execution models helps traders choose brokers whose trading infrastructure aligns with their strategy and risk preferences.
In short: These are execution methods that route trader orders directly to liquidity providers or markets without broker intervention as a counterparty.
Example in Action
You want to buy USD/ZAR at 18.5000, and your broker advertises three execution models.
With a Dealing Desk model, the broker might quote you 18.5050 (adding 5 pips as their markup) and take the opposite side of your trade.
With STP execution, your broker sends your order straight through to a liquidity provider who fills you at 18.5020 (the best available interbank price plus a small 2-pip markup), so you get tighter pricing.
With ECN or DMA execution, your order goes directly into a pool where multiple banks compete, and you might get filled at 18.5005 with just a small commission fee charged separately, giving you the rawest institutional price with full market transparency. Major electronic trading platforms like EBS and Reuters Matching use order matching systems to connect buyers and sellers in the foreign exchange market. In contrast, multi-dealer platforms aggregate liquidity from several financial institutions simultaneously, whereas single-dealer platforms route orders to just one liquidity provider at a time.
Why It Matters
Understanding execution models isn't just technical jargon—it's the difference between getting played and actually trading on real market terms. STP, ECN, and DMA reduce broker intervention, minimize conflicts of interest, and boost transparency.
They automate routing, expose real pricing, and cut manipulation risks. For African traders steering through opaque brokers and questionable spreads, knowing these models means spotting who's genuine—and who's running a rigged game.
Common Questions
Which African Brokers Truly Offer ECN Accounts Versus Just Marketing Labels?
FP Markets, Pepperstone, IC Markets, FXTM, and BlackBull Markets offer documented ECN accounts in Africa with raw spreads, commission charges, and market execution. Many local brokers claim ECN status but lack transparent commission structures and depth-of-market features.
Do STP Brokers in Nigeria and Kenya Execute Trades Differently?
No. STP brokers in Nigeria and Kenya execute trades identically, routing orders through the same global infrastructure and liquidity providers. Differences appear only in local payment methods, regulatory oversight, and customer support—not in core execution mechanics.
Can I Verify DMA Execution With Brokers Operating in South Africa?
South African traders can verify DMA execution by reviewing FSCA disclosures, examining broker execution policies, requesting trade confirmations showing external venue routing, and confirming commission-based fee structures typical of genuine direct market access models.
Why Do African Traders Face Higher Spreads on ECN Accounts?
African traders face higher ECN spreads due to shallow local liquidity, fragmented regulation, reliance on offshore brokers, fewer competitive liquidity providers, currency conversion costs, inferior connectivity causing slippage, and executing trades during off-peak global sessions with limited market depth.
Which Execution Model Works Best for Trading African Currency Pairs?
DMA and ECN models work best for African currency pairs, offering superior transparency, direct liquidity access, and better price discovery in volatile, illiquid markets—critical advantages when trading exotic pairs like USD/ZAR or USD/NGN.
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