Stp broker
Family V · Platforms
Not to be confused with forex broker, broker, ecn broker.
STP broker stands for Straight Through Processing broker. It receives client orders and passes them to external liquidity providers, such as banks or non-bank market makers, instead of filling them from its own book. The broker earns from a markup, commission or spread rather than from client losses.
How order flow is handled
An STP broker connects client orders to one or more liquidity providers. The broker does not normally act as the counterparty, so the trade is offset externally. Revenue comes from a spread markup, a commission, or both, and is disclosed in the trading terms.
Execution speed, slippage and available liquidity depend on the broker's provider relationships and technology. These details vary by broker and jurisdiction, and are not uniform across the industry.
Worked example: cost of an STP trade
A trader buys 1 standard lot of EUR/USD at an ask of 1.0850. The liquidity provider's raw spread is 0.2 pips, and the broker adds a 0.3 pip markup.
The $5.00 is the spread cost on this trade. A separate commission, if charged, would be added to this figure.
What STP does not guarantee
STP describes order routing, not execution quality or regulatory protection. A broker using STP may still hold client funds, set its own leverage limits, and operate under different rules depending on its licence. Slippage and requotes can occur when liquidity is thin.
Some brokers combine STP with internal matching for certain order types, so the label alone does not describe every trade. The specific model is set out in the broker's execution policy.
Often confused with
- forex broker
- A forex broker is any firm that facilitates currency trading, whether by STP, market making or another model, while an STP broker is defined by its pass-through routing; the visible sign is whether the execution policy states that orders are sent to external liquidity providers.
- broker
- A broker is a general intermediary that arranges transactions in many asset classes, whereas an STP broker is a specific execution model within trading; the visible sign is the presence of an STP or straight-through processing label in the firm's execution disclosure.
- ecn broker
- An ECN broker matches client orders against other participants in an electronic network, while an STP broker routes them to liquidity providers; the visible sign is whether the venue shows a central order book with counterparty matching rather than a provider list.