What is an STP broker? STP vs ECN vs market maker

A clear explanation of STP (straight-through processing) in forex: how orders flow, how STP brokers make money, and how STP compares with ECN and market maker models.

EVO PlatformsRisk & executionNovember 2, 20268 min read

Anyone researching how to open a brokerage soon runs into three labels: STP, ECN and market maker. They describe what happens to a client's order after they press Buy or Sell — and that decides how the broker makes money and what risk it carries. So, what is an STP broker, and how is it different from the other two?

This guide explains STP (straight-through processing) in plain language, shows how orders flow, how STP brokers earn, how ECN and market making compare, how these labels relate to A-book, B-book and hybrid models, and what technology each model needs.

Key takeaways

An STP broker routes client orders automatically to external liquidity providers instead of taking the other side.
STP brokers earn mainly from spread markups and commissions, so the model depends on trading volume.
ECN connects orders to a wider network with raw spreads plus commission; a market maker (B-book) is the counterparty itself.
STP is a form of A-book; most real-world brokers run a hybrid of A-book and B-book.
EVO is built for B-book brokers; liquidity provider integration for STP or hybrid is available as custom development on request.

What is an STP broker?

STP stands for straight-through processing. An STP broker passes its clients' orders automatically to one or more external liquidity providers — typically banks, prime brokers or non-bank market makers — instead of taking the other side of the trade itself.

"Straight through" means there is no manual step and, in principle, no dealing desk deciding whether to accept the order. The order goes from the client's platform to the broker's system, which routes it to a liquidity provider, and the fill comes back to the client. STP brokers are often described as no dealing desk (NDD) brokers for this reason.

What STP means for the client

Prices reflect what the broker's liquidity providers are quoting, plus any markup the broker adds.
Spreads are usually variable, widening in fast or thin markets.
Slippage can go either way, because orders are filled at the price available from the provider.
The broker does not, in a pure STP setup, profit when the client loses.

How orders flow in an STP model

Under the hood, an STP broker connects its trading platform to liquidity through a bridge or aggregation layer. A simplified order path looks like this:

1The client places an order on the broker's trading platform.
2The broker's server checks margin, leverage and account status.
3The order is passed to a bridge or aggregator that holds connections to one or more liquidity providers.
4The aggregator selects the best available price (or routes by rules the broker sets).
5The liquidity provider fills the order and sends back the execution price.
6The fill, with any broker markup or commission applied, is shown on the client's account.

Because a real counterparty is on the other side, the broker also needs a funded account (or credit line) with the liquidity provider and has to manage margin there — a cost that pure market makers do not have in the same form.

How STP brokers make money

Since an STP broker is not betting against its clients, it earns from volume rather than from client losses. The two main sources are:

Spread markup — the broker receives a price from its liquidity provider and adds a small amount to the spread shown to clients. If the provider quotes EUR/USD with a 0.3-pip spread and the broker shows 1.0 pip, the difference is the broker's revenue on each trade.
Commission — the broker charges a fixed fee per lot traded, often combined with tighter spreads. This is common on "raw" or "pro" account types.

Some brokers also earn from swap (overnight financing) adjustments or rebates from liquidity providers, depending on their agreements. Because revenue scales with trading volume, STP margins per trade are thin and the model generally needs meaningful volume to be profitable.

Figures above are illustrative only. Actual spreads, markups and commissions vary widely by provider, instrument, account type and market conditions.

What is ECN, and what is a market maker?

ECN brokers

ECN stands for electronic communication network. An ECN broker gives clients access to a network where orders from many participants — banks, funds, other brokers and traders — interact. Prices come from that pool, and in some setups clients can see market depth. ECN accounts usually show very tight raw spreads and charge a separate commission.

In practice the line between STP and ECN is blurry. Many retail brokers use "ECN" as a marketing name for an STP account with raw spreads and commission, even if orders are routed to liquidity providers rather than into a true multilateral network.

Market makers (B-book)

A market maker quotes its own buy and sell prices and takes the opposite side of client trades internally. This is what the industry calls B-book. The broker profits from spreads and from net client losses, and carries the market risk of client positions. Market makers often offer fixed or stable spreads and instant execution, and they manage risk through internal controls such as exposure limits, leverage settings and spread control.

STP vs ECN vs market maker: comparison table

Feature	STP	ECN	Market maker (B-book)
Who is the counterparty	External liquidity provider(s)	Other participants in the network	The broker itself
Dealing desk	No (in principle)	No	Yes, or automated internal risk management
Main revenue	Spread markup and/or commission	Commission per lot	Spread plus net client losses
Typical spreads	Variable	Very tight raw spreads, variable	Often fixed or stable
Broker's market risk	Low on routed trades	Low	High — needs active risk management
Conflict of interest	Lower	Lower	Higher, managed by rules and regulation
Capital and setup needs	LP accounts, bridge, aggregation	Network access, bridge, higher volume	Risk capital, back office and risk tools
Typical fit	Brokers with steady volume	Professional or high-volume traders	Many new and retail-focused brokers

None of these models is automatically "better". They trade off risk, revenue, cost and client experience differently, and regulators in different jurisdictions treat them differently.

Pros and cons of the STP model

Advantages

Lower market risk — the broker is not exposed to client profits on routed trades.
Easier to explain — the "we pass your orders to the market" story is attractive to experienced traders.
Reduced conflict of interest — revenue comes from activity, not from clients losing.
Scales with volume — more trading means more markup and commission.

Disadvantages

Thinner margins — revenue per trade is small, so low-volume brokers can struggle.
Extra costs and complexity — liquidity provider agreements, collateral, bridge fees and technology.
Variable spreads and slippage — clients may see wider spreads during news or low liquidity.
Dependency on providers — outages, re-quotes or poor fills at the provider affect your clients directly.

How STP relates to A-book, B-book and hybrid

STP is essentially a form of A-book: trades are passed to the market instead of being held internally. Market making is B-book. Most brokers in practice run a hybrid model — they keep most retail flow on the B-book and route selected clients, instruments or large trades to liquidity providers, often based on client profitability or exposure size.

That is why a broker can advertise STP accounts while still internalising part of its flow. What matters for a founder is understanding which model fits your capital, target clients and licence. We cover this in detail in A-book vs B-book vs hybrid, and dealing-side tools in risk groups and the dealing room.

Licensing requirements and allowed execution models vary by jurisdiction. This article is general information, not legal or financial advice — consult a licensed advisor before choosing a model or licence.

What technology an STP or hybrid broker needs

Whatever the model, the client-facing stack is similar. The difference is on the execution side:

Trading platform — where clients see prices and place orders.
Price feed — real-time quotes for every instrument you offer.
CRM and back office — client accounts, KYC, deposits, withdrawals, leverage, spreads and limits.
Risk tools — exposure monitoring, margin call and stop out, per-symbol limits.
For STP/A-book only: a bridge or aggregator, connections to one or more liquidity providers, routing rules and reconciliation of fills.
For hybrid: rules that decide which clients or trades go to A-book and which stay on B-book.

If you are launching for the first time, see how to start a forex brokerage for the full list of components and decisions.

Where EVO fits

EVO Platforms is a white-label brokerage technology provider, not a broker. Its standard stack — EVO WebTrader, EVO-CRM, the back office and risk tools, a built-in price feed with 250+ real-time symbols and a broker website — is built for B-book brokers. The back office already covers limits per symbol, spread control, leverage per client and automatic margin call and stop out. Risk groups and a dealing room are coming soon.

If your business plan includes STP or hybrid execution, liquidity provider integration is available through EVO custom development: it is built on request and quoted for your setup. Each broker runs on an isolated server, with 24/7 support and a flat monthly fee — contact EVO for current plans.

Frequently asked questions

What does STP mean in forex?

STP means straight-through processing. In forex it describes a broker that sends client orders automatically to external liquidity providers, such as banks or non-bank market makers, without a dealing desk intervening. The broker earns from spread markups or commissions rather than from client losses on those routed trades.

What is the difference between STP and ECN?

Both pass orders outside the broker. An STP broker routes orders to one or more chosen liquidity providers, usually adding a markup to the spread. An ECN broker connects orders to a network of many participants and typically shows raw spreads with a separate commission. In retail forex the terms are often used loosely and overlap.

What is the difference between STP and a market maker?

A market maker takes the opposite side of client trades itself (B-book), so it carries market risk and can profit from client losses. An STP broker passes trades to liquidity providers (A-book) and earns from markup or commission. Many brokers combine both in a hybrid model.

Is an STP broker better than a market maker?

Not automatically. STP reduces the broker's market risk and conflict of interest but has thinner margins and higher technology and liquidity costs. Market making can be more profitable per client but requires strong risk management and capital. The right choice depends on volume, capital, target clients and licence.

Does EVO support STP execution?

EVO's standard platform is built for B-book brokers. Liquidity provider integration for STP or hybrid execution is not part of the standard package but is available as custom development, built on request and quoted for each broker's setup.

This article is for general information only and is not legal, tax or financial advice.

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