Is IG Markets a Market Maker, STP or ECN+STP broker? (i’m refering to their standard forex accounts not DMA account)
All of those acronyms are mostly meaningless and used as marketing jargon by trading platforms, usually in an attempt to try and differentiate themselves and also sound more “sophisticated”.
What you really want to know are two things:
- Am I getting the best price?
- If yes, is my order being executed at my requested price (or better)?
In order to achieve #2, order execution speed is important. The time elapsed between order receipt and execution is critical. Obviously, the faster, the better.
It doesn’t really matter what acronym the trading platform is if they’re able to achieve the two objectives above.
Regarding IG Markets specifically, this is what’s written in their Order Execution Policy:
In relation to Contracts that you enter into with us, we act as principal and not as
agent on your behalf and we therefore act as the sole execution venue for the
execution of your Contracts. This means that we will act as market maker and you
will be dealing with us and not within the underlying market.The main way in which we will ensure that you obtain best execution is by ensuring
that in the calculation of our bid/offer prices used to execute your Contracts, we
pay due regard to the market price for the underlying reference product to which
your Contract relates. We have access to a number of different data sources in
order to ascertain the market price, which is our objective view of the bids and
offers available to arms’ length traders
In plain English, they’ll take the opposite of your trade but take measures to provide you with “real” prices according to their “data sources”.
According to their list, here are their supposed “data sources”:
Bank of America
Barclays
Citadel
Citibank
EBS
Goldman Sachs
Hotspot
HSBC
JP Morgan
Morgan Stanley
UBS
XTX
There’s nothing wrong with IG’s approach as long as the two objectives that were mentioned earlier are achieved.
In reality, almost ALL retail forex trading platforms operate this way.
Don’t be fooled by the acronyms they used. Look past them.
They all take the opposite side of retail traders’ orders. (Retail forex trading platforms are NOT brokers, they’re dealers.)
What happens afterward is different for each platform.
Since they’ve taken on risk (by being your counterparty), each has its own approach managing that risk.
Regardless of the marketing copy, most retail spot forex and CFD trading platforms are market makers and are your trading counterparty and take the opposite of your trade.
They usually have to. The position sizes of retail traders are too small for institutional players.
And if they didn’t have to, they usually WANT to.
Most retail traders lose due to their own poor trading decisions so it’s profitable to take the opposite of your trade and then “get out of the way” and simply wait for your trade to lose.
You lose, they win. But it was your fault, not theirs.
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