Market StructureStraight Through ProcessingNo Dealing Desk
STP (Straight Through Processing)
An execution model in which client orders are passed automatically to external liquidity providers rather than dealt internally.
What STP (Straight Through Processing) means
Straight through processing describes a workflow where an incoming client order is routed automatically to one or more external liquidity providers and filled against their quotes, without manual dealer intervention. The broker aggregates provider prices, usually adds a markup to the spread, and passes the fill back to the client. Unlike an ECN, there is no shared anonymous book: the broker deals bilaterally with each provider and the client deals bilaterally with the broker.
STP is often marketed as no-dealing-desk execution, implying the broker has no position against the client. In practice the label describes routing rather than risk: a firm can run STP plumbing and still choose which flow it hedges. Cost is usually embedded in a marked-up spread rather than charged as commission, which makes comparison with commission-based accounts harder. Execution quality depends on the provider panel, aggregation logic and how often providers reject or last-look the flow.
Worked example
If providers quote EUR/USD at 1.08498 / 1.08502, an STP broker adding a 0.6 pip markup shows the client 1.08495 / 1.08505 and charges no separate commission.
Related terms
- ECN (Electronic Communication Network)An electronic venue that anonymously matches buy and sell orders from many participants in a shared order book.
- A-BookA broker risk model in which client trades are hedged one-for-one with external liquidity providers.
- Liquidity ProviderA bank, non-bank market maker or institution that streams two-way prices a broker can fill client orders against.
- MarkupThe amount a broker adds to a wholesale price or rate before showing it to the client, forming part of its revenue.
- Market ExecutionAn execution model in which orders are always filled at the best available price, with no requotes.
Frequently asked questions
What does STP (Straight Through Processing) mean in forex trading?
An execution model in which client orders are passed automatically to external liquidity providers rather than dealt internally.
How does STP (Straight Through Processing) work in practice?
STP is often marketed as no-dealing-desk execution, implying the broker has no position against the client. In practice the label describes routing rather than risk: a firm can run STP plumbing and still choose which flow it hedges. Cost is usually embedded in a marked-up spread rather than charged as commission, which makes comparison with commission-based accounts harder. Execution quality depends on the provider panel, aggregation logic and how often providers reject or last-look the flow.
What is an example of STP (Straight Through Processing)?
If providers quote EUR/USD at 1.08498 / 1.08502, an STP broker adding a 0.6 pip markup shows the client 1.08495 / 1.08505 and charges no separate commission.
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