Straight Through Processing (“STP”) is a unique process which enhances the speed of execution of clients’ orders, by avoiding interventions of a dealing desk. Clients’ orders are transmitted to liquidity providers/execution venues automatically which provides for the execution of clients’ orders in an efficient and timely manner. An “STP Broker” is not a counterparty to clients’ transactions but instead transmit all orders to liquidity providers/execution venues. STP Broker earns money from the trading volume, by either adding a “mark-up/down” on the spread and/or commission charge. Trading through STP Broker generally reduces conflict of interest considering that clients’ profits/losses are not affecting the Broker’s earnings. An STP broker does not implement any strategy restrictions and trading is provided with full transparency.
Therefore, there is no conflict of interest. If the client wins or loses on a trade, the broker receives the same amount. Overall, however, there is an intrinsic advantage to the broker if the client is successful with his/her trading as they will then trade with more volume for a longer period, resulting in greater profits for both parties, with full transparency.