An STP (straight-through processing) broker passes client orders to liquidity providers and earns from markups or commissions. An ECN-style broker gives clients access to a pool of competing prices, usually with raw spreads plus a commission. A market maker takes the other side of client trades and manages the resulting risk in-house. Most brokers today run a hybrid model, routing some flow to liquidity providers and internalising the rest, within the limits of their licence.
- STP brokers pass orders to liquidity providers and earn markups or commissions.
- ECN-style brokers show competing prices with raw spreads plus a commission.
- Market makers take the other side of client trades and carry the market risk.
- Most brokers run a hybrid model, routing flow by client, size and behaviour.
- Your licence may restrict which models you can run and what you must disclose.
Looking for broker risk management tools? Exposure monitoring, routing rules and alerts for hybrid brokers.
The execution model decides how your brokerage earns money, how much risk it carries and which technology it needs.
The three models compared
| STP | ECN-style | Market maker | |
|---|---|---|---|
| Order handling | Passed to liquidity providers | Matched against a pool of competing prices | Broker takes the other side |
| Main revenue | Markup and/or commission | Commission per lot | Spread and client trading results |
| Market risk | Low | Low | High; needs active risk management |
| Key technology | Bridge and LPs | Aggregation, depth of market | Risk management tools |
Why most brokers run a hybrid model
A hybrid broker routes flow by rules: for example, larger or consistently profitable clients are hedged with liquidity providers, while other flow is kept in-house within strict exposure limits. This balances revenue and risk. See A-book vs B-book vs hybrid and toxic flow.
Technology you need for each
- STP / ECN: a liquidity bridge, one or more prime of prime providers, aggregation and execution reports.
- Market maker / hybrid: real-time exposure monitoring, routing rules, alerts and dynamic leverage.
- All models: an MT5 white label or other platform, a forex CRM and reporting.
General information only, not legal, financial or tax advice. Each client is responsible for its licences and the laws of every country where it operates.