STP broker

An STP (Straight Through Processing) broker automates order execution, sending client trades directly to external liquidity providers such as banks or other financial institutions. This eliminates a dealing desk, meaning the broker does not take the opposite side of client trades. Instead, the STP broker aggregates prices from multiple liquidity sources, offering clients the best available bid and ask quotes. This system aims to provide faster execution and reduced requotes.

For a retail trader, an STP broker typically charges a commission per trade in addition to a raw spread. This model contrasts with market makers who profit primarily from the spread. STP execution can result in lower latency and less slippage during volatile periods, as orders are filled by external parties. Transparency in pricing and execution speed are key benefits, potentially improving overall trading conditions and reducing hidden costs.