Types and names of UK brokers

UK Forex brokers are available for retail investors who provide access to interbank markets. They generally have a proprietary trading platform through which traders place buy and sell orders on currency pairs, in this way even small traders can access the 24 hour trading currency markets.

There are several types of brokers. They can be considered under the heading of those having a dealing desk and those without a dealing desk. Which include both STP (Straight Through Processing) and ECN (Electronic Communication Network) Brokers. The names of UK Forex brokers mentioned below can be confirmed and authenticated through UK Forex broker reviews.

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1. Brokers offering dealing desks: These brokers act as market makers for small retail traders. These brokers do not have Level II box in their trading terminals. Instead they receive Level II quotes directly from interbank market via their own account; they then modify these quotes and post them on their terminals. These brokers advertise that they do not charge commissions. Unlike in stocks where you pay commission every time you buy or sell stocks, every time you trade currencies your trading terminal does not show any commission charged. Instead these brokers make money from the bid and ask spread that is usually a few pips. These dealing desk brokers are on opposite side of your trades and hence assume market risk, which they usually hedge by entering interbank market. Most UK Forex brokers who do not advertise STP or ECN on their site are usually dealing desk brokers. Although there is a lot of bad publicity about dealing desk brokers, these brokers are the only trading venue available for small traders like those trading micro lot currency pairs. An example of FSA regulated broker offering dealing desk to its clients who trade mini and micro lot sizes is FXCM UK.

2. STP or Straight Through Processing Brokers:These brokers take your orders and pass them directly to third party, which is usually a market maker at one of the large interbank dealers. Occasionally these orders may be passed directly to large client to fill their order. The order finally enters ECN either through the interbank market or STP broker may directly send order to ECN through their trading terminal. They do not modify or delay your order in any way. This improves liquidity. It is also very rare to have re-quotes on STP trading platform. Examples of UK brokers offering Straight Through Processing to their clients are ActivTrades, BARX Barclays capital, FXCM, MFglobal, UWC.

3. ECN Electronic communication network brokers: An ECN network connects major forex brokerages, large forex trading banks and large traders so they can trade directly with each other, without having to go through a middle man. An ECN broker provides direct access to currency markets. The accounts offered by these brokers usually require several thousand dollars to open. ECN brokers can offer tighter spreads on forex pairs to their clients than other brokers. As these spreads are much narrower than those used by other brokers, ECN brokers charge a fixed commission for every trading transaction. Examples of UK brokers are; Alpari UK.CMS forex, Deltastock, ICAP, IG markets.