STP (straight-through processing)

Straight-through processing means orders flow electronically from the client's platform to one or more liquidity providers (banks, non-bank market makers or aggregators) without manual intervention by a dealing desk. The broker typically adds a mark-up to the spread it receives, or charges a commission, and earns from that rather than from client losses.

STP is often grouped with ECN under "no dealing desk" or "A-book" execution. The difference is mostly one of emphasis: ECN implies access to a pool of competing quotes and usually raw spreads plus commission, while STP may route to a small set of providers with a mark-up built into the spread.

Example

Illustrative figures: a liquidity provider quotes EUR/USD at 1.08520 bid and 1.08524 ask, a spread of 0.4 pips. An STP broker might show its clients 1.08515 / 1.08529, a 1.4-pip spread, keeping the 1-pip difference (10 dollars per standard lot) as its revenue. An ECN-style account might show the raw 0.4-pip spread and charge, say, 7 dollars per round-turn lot. The all-in costs here are 14 and 11 dollars respectively.

Practical notes

• Labels are marketing. Many brokers run a hybrid model, sending some clients or trades to the market (A-book) and internalising others (B-book). See A-book and B-book.
• STP does not remove all conflicts. The broker still controls mark-ups, execution rules and which clients get which treatment.
• What matters to you is the measurable result: typical spreads, commissions, slippage statistics and requote rates, and whether the firm is properly regulated.

Our guides to ECN, STP and market maker execution and how forex brokers make money go into more detail.