Organization of the ECN broker's work on FOREX
For an exact understanding of the principles of ECN broker working, let us remind ourselves how the market value of any financial asset is formulated on FOREX - the dynamic of value is subordinate to the law of supply and demand. An increase in price always follows increased demand and vice versa. On FOREX (as in any other market) some participants wish to buy, others want to sell.
Suppose for example that one trader has decided to buy 10,000 EUR at a rate of 1.2500 USD for 1 EUR, and another at the same time wanted to sell the same amount of EUR at the same price. Executing the bids of these traders, the ECN broker transmits their orders into the system, where they are then executed (overlapping each other).
ECN brings together several major FOREX participants, significantly widening the flow of liquidity on financial assets. Accordingly traders receive access to the interbank market. The mechanism for ensuring this access will be looked at in more detail later.
EXNESS LIMITED (NZ) has concluded agreements and opened trading accounts with many famous brokers:
|Founded in 2010. Capitalization of the company amounts to 400 million dollars. Regulated by the Central Bank of the United Arab Emirates.|
|Founded in 2011. Regulated by the Malta Financial Services Authority (MFSA).|
|FXCMPRO is an institutional division of FXCM, providing pricing and execution solutions to some of the largest Traders in the FX market. With 5 yards/day of volume and over 700 clients, FXCMPRO has been successfully servicing banks, hedge funds and brokers since 2005.|
|Market Securities was originally established in 2002, as a division of Kyte Broking Ltd, by a group of brokers with experience and knowledge gained across Equity Derivatives markets. Market Securities offers a specialist electronic FX markets execution venue delivering low latency access to tailored FX liquidity pools via GUI and API. Acting as a pure agency broker Market Securities never takes the risk of a positions which leads to very fast execution. Having all major banks and hedge funds as liquidity providers Market Securities offers a unique pool of liquidity for banks, hedge funds and brokers.|
Having implemented the technology for transmitting its clients' bids (for their subsequent execution) into the trading systems of the major market participants, EXNESS LIMITED (NZ) has gained the opportunity to invite traders to exploit all the advantages of ECN in their work.
It can be said that ECN is an interbank market in which the execution of bids not only precludes a conflict of interest between brokers and traders but also, in the absence of a monopoly on pricing, allows the execution of clients' bids at best prices. A regular ECN broker receives income on his commission account which clients pay for each transaction, and does not take any part in the formation of the pricing on a specific trading instrument. Current prices are primarily determined by the bids of participants in the system.