Forex Trading Execution Model Review 2025 | ECN, STP, and Market Maker: The Real Differences and Platform Comparison

1. Definition of the three mainstream execution modes

1. ECN (Electronic Communication Network)

• A true matching transaction model;

• Investor orders enter the market directly and are traded with banks and other traders;

• The spreads are very low, but commissions are charged.

2. STP (Straight Through Processing)

• The platform acts as an intermediary, passing orders to liquidity providers (LPs);

• It may be a single or multiple LPs, and the execution speed depends on the channel;

• The spreads are floating, but the commissions are relatively transparent.

3. MM (Market Maker)

• The platform directly acts as a counterparty;

• Offer fixed or floating spreads;

• There is a potential conflict of interest (customer loss = platform profit).

👉 At BrokerHiveX Academy, we have concluded that execution model does not determine whether a platform is good or bad. The key lies in transparency and supervision .

2. Comparison of Execution Modes of Mainstream Platforms

👉Evidence : IC Markets and Pepperstone can be verified on the ASIC official website ; IG Group can be found on the FCA official website .

3. Real transaction cases

• Case 1: IC Markets Scalping
  Traders in the ECN environment have a EUR/USD spread of 0.0–0.1, a commission of $7/lot, an execution time of 35 milliseconds, and almost no slippage.

• Case 2: Pepperstone Hybrid Execution
  User experience: ECN account has low spreads, but some orders go through STP, which is slightly slower.

• Case 3: IG Group’s market maker model
  Although it is a market maker, IG has high transparency under FCA supervision and has not had any malicious order rejections.

• Case 4: Fraudulent Platform "Fake ECN"
  An offshore platform advertised "ECN zero spread", but the actual spread was 2-3 pips, and the orders did not enter the market. 👉 Exposed on BrokerHiveX .

4. Advantages and Disadvantages of Execution Mode

1. ECN

• ✅ High transparency, suitable for scalping;

• ❌ The commission cost is high and newcomers are not used to it.

2. STP

• ✅ The cost is moderate and suitable for most traders;

• ❌ The execution speed of some orders depends on LP and may be delayed during fluctuations.

3. MM Market Maker

• ✅ Fixed spread, suitable for beginners;

• ❌ There is a conflict of interest, and the risk is high if there is no regulatory constraints.

V. Regulatory Agency Requirements for Implementation Models

• FCA/ASIC/CySEC : Require platforms to disclose execution models and prohibit false advertising.

• NFA/CFTC (US) : Mandatory reporting of order executions to prevent manipulation.

• MAS (Singapore) : The execution mode must be clearly marked.

• Offshore platforms : Common “pseudo ECN, pseudo STP” scams, without regulatory constraints.

👉 Evidence : In the CySEC warning announcement , penalties for "fake ECN" promotion are mentioned many times.

6. Investor Self-Assessment Method

1. Check regulatory disclosures → View execution model descriptions on the FCA, ASIC, and CySEC websites;

2. Live order → Test latency and slippage;

3. Compare different account types → ECN/Raw Spread vs Standard;

4. Search the BrokerHiveX exposure area → Check if there are any execution anomaly complaints.

VII. Risk Warning List

• ❌ The platform promises “100% no slippage”, which is actually impossible;

• The platform claims to be “ECN”, but the spreads are much higher than other similar platforms.

• ❌ The platform refuses to disclose its liquidity providers;

• ❌ Offshore platforms use “pseudo STP/ECN” to lure users into depositing funds.

8. Frequently Asked Questions for Investors

1. Is the ECN platform necessarily the best?
   👉 Not absolutely. Newbies may not be used to the commission and slippage costs.

2. Is the market maker platform necessarily bad?
   👉 Not necessarily. Large market makers like IG are still transparent under regulation.

3. What is the difference between STP and ECN?
   👉 STP is the platform that selects LPs, while ECN is the market matchmaker, which is more transparent.

IX. Conclusion and Investment Recommendations

1. Scalpers/High-Frequency Traders → Prefer ECN (e.g. IC Markets, Pepperstone);

2. Day/Intermediate Traders → STP mode is more flexible and suitable for most;

3. Newbies → The market maker model has fixed spreads and low learning costs, but requires strong regulatory protection (such as IG and XM).

Investment advice :

• Don’t blindly trust “ECN” propaganda, you must verify it;

• Check the license and enforcement model disclosures on the official websites of FCA, ASIC, and CySEC;

• Verify slippage and latency through small-amount test orders;

• Refer to the BrokerHiveX exposure area regularly and be wary of "pseudo-ECN" traps.

👉 Conclusion: There is no absolute good or bad execution model . Transparency + regulatory compliance + real experience are the core criteria for judging whether a platform is reliable.