
No Dealing Desk (NDD)
No Dealing Desk describes a trading platform offered by a forex broker that provides unfiltered access to interbank market rates of exchange. In contrast to Dealing Desk, or market-making, brokers, who publish rates and prices that are similar, but not the same as, the interbank market rates, NDD brokers offer what is known as Straight-Through Processing (STP) execution of forex trades. An NDD broker stands in contrast to market-making brokers who attempt to stand in between customers and the interbank market as a means of making trades (theoretically) quicker and more efficient. To do so they do not aid the trader working directly with the interbank market, but rather make a market, or in other words offer trades, where they can bring the spread potentially the same or even closer than the interbank market rate. Direct access to interbank rates may help traders in some cases but hurt them in others. Trading with an NDD broker assures the trader that their broker has no conflict of interest with their trades.

What Is No Dealing Desk (NDD)?
No Dealing Desk describes a trading platform offered by a forex broker that provides unfiltered access to interbank market rates of exchange.



Understanding No Dealing Desk (NDD)
In contrast to Dealing Desk, or market-making, brokers, who publish rates and prices that are similar, but not the same as, the interbank market rates, NDD brokers offer what is known as Straight-Through Processing (STP) execution of forex trades.
Forex brokers who use this system work directly with market liquidity providers. When trading through an NDD, instead of dealing with one liquidity provider, an investor is dealing with numerous providers to get the most competitive bid and ask prices. An investor using this method has access to instantly executable rates. They may use electronic communication network (ECN) methods to make it work.
The implications of dealing directly with the interbank market are twofold: the size of currency rate spreads and the amount of additional cost to make a trade. With an NDD broker, traders are exposed directly to the exact spread available to retail customers on the interbank market. Depending on the currency pair being traded, and depending on the dealing-desk broker being compared, NDD brokers may offer wider spreads. That means the cost to make a trade is greater (since retail traders must give up the value of the spread with each round-trip trade).
Additionally, an NDD broker may charge an exchange fee or a commission. Because they are passing the spread directly through to the customer, they have to charge fees some other way or face making no money for their services. In these two ways trading with an NDD broker may become more expensive over time by comparison to dealing-desk brokers.
Market Making Brokers
An NDD broker stands in contrast to market-making brokers who attempt to stand in between customers and the interbank market as a means of making trades (theoretically) quicker and more efficient. To do so, they accept the risk that they can anticipate changes in the market well enough to shield against market risk.
The intent, on their part, is to make trading convenient and less expensive so retail traders want to do business with them. To do so they do not aid the trader working directly with the interbank market, but rather make a market, or in other words offer trades, where they can bring the spread potentially the same or even closer than the interbank market rate. In such a trade, the retail trader benefits by paying less money. The broker benefits because they get to keep the entire spread.
The drawback is that to accomplish this, dealing-desk brokers make a market by often taking the other side of the trade — putting them in a direct conflict of interest with their customers. So long as they are highly adept at offering such pricing, and not straying from the interbank rates, this business model benefits both them and their customers. But that is not always easy to do, and some dealing-desk brokers have had to be subjected to regulatory oversight for running their business models poorly.
By using a dealing desk, a forex broker who is registered as a Futures Commission Merchant (FCM) and a Retail Foreign Exchange Dealer (RFED) can make enough money to offset trades and even offer more competitive spreads. If a no dealing desk system is used, positions are automatically offset and then transmitted directly to the interbank, which may or may not benefit the retail trader.
Related terms:
Competitive Bid
A competitive bid is most commonly associated with a proposal and price submitted by a vendor or service provider to a soliciting firm for products or services to win a business contract. read more
What Is a Forex Broker?
A forex broker is a financial services firm that offers its clients the ability to trade foreign currencies. Forex is short for foreign exchange. read more
Currency Trading Platform Defintion
A currency trading platform is a type of trading platform used to help currency traders with forex trading analysis and trade execution. read more
Dealing Desk
A dealing desk is where market makers execute and trade financial instruments like forex, equities, options, commodities, and other financial assets. read more
Direct-Access Broker
A direct-access broker is a stockbroker that concentrates on speed and order execution—unlike a full-service broker focused on research and advice. read more
Electronic Communication Network (ECN)
ECN is an electronic system that matches buy and sell orders in the markets eliminating the need for a third party to facilitate those trades. read more
Futures Commission Merchant (FCM)
A futures commission merchant (FCM) solicits or accepts orders to buy or sell futures contracts or options on futures for a payment from customers. read more
Foreign Exchange (Forex)
The foreign exchange (Forex) is the conversion of one currency into another currency. read more
Forex Market
The forex market is where banks, funds, and individuals can buy or sell currencies for hedging and speculation. Read how to get started in the forex market. read more
Forex Spot Rate
The forex spot rate is the most commonly quoted forex rate in both the wholesale and retail market. read more