A Look into the Past

Before cTrader, the ECN execution model was widely used by institutional stakeholders to trade on behalf of their corporate and hedge funds clients. In contrast, brokers serving retail clients had to internalise transitions and manually hedge their risk due to the incompatibility of different models and methods of order execution.

At the time, the minimum ticket size for ECN execution was $1 million, forcing retail brokers to rely on the RFQ (Request for Quotes) model. This prevented retail players from offering superior trading conditions to their clients and, consequently, growing their businesses. As part of its Traders First™ approach, cTrader chose to disrupt the previously existing paradigm rather than follow what everybody else was doing.

The cTrader Approach to STP/ECN

cTrader pioneered the STP/ECN model through several major milestones.

Aggregating tickets and therefore reducing the minimum ticket size to just $1K.

Integrating the leading prime brokers and aggregators with major retail brokers.

Establishing the FIX protocol as the norm for communicating finance-related information in retail trading.

Empowering retail traders to trade via the STP/ECN model through prime brokers’ banks.

cTrader has made sure that retail brokers are provided with the same tools and opportunities that had previously been available to institutional brokers only. By giving retail brokers access to the STP/ECN model, cTrader has also eliminated the conflict of interest between traders and brokers. Instead of trading against their clients, brokers have become incentivised to prolong the trader lifecycle by offering valuable features and fair trading conditions.

Key Benefits of the STP/ECN Solution

cTrader’s implementation of its STP/ECN model has allowed forex stakeholders to achieve the following benefits.

Traders have received access to conditions that, on average, are at least as good (if not better) than the conditions typically enjoyed by banks (e.g. frequent negative spreads).

The overall amount that traders have to pay on spreads has decreased dramatically, enabling traders to allocate more of their funds to placing new orders.

VWAP execution of tickets of any size has become the industry standard for fairness and transparency regardless of brokers’ business models.

Brokers now have no need for requote mechanisms.

Overall, order execution has become significantly faster.

As part of the non-dealing desk approach, dealers cannot interfere with order execution prices.