| Updated: June 13, 2024Known for offering some of the lowest forex spreads, ECN brokers have become the brokers of choice for many modern traders, especially those who have grown displeased with what market makers have to offer. ECN stands for “electronic communication network,” and it enables brokers to connect clients to liquidity providers and institutions. If you are interested in the best brokers that utilize ECN execution and are eager to learn more about the advantages and disadvantages of this technology, we encourage you to continue reading.
FP Markets73.85% of retail investor accounts lose money
Fusion Markets74-89% of retail CFD accounts lose money
IC Markets70.64% of retail investor accounts lose money
OctaFX
Eightcap76.09% of retail investor accounts lose money
Global Prime74-89% of retail CFD accounts lose money
Saxo Bank65% of retail investor accounts lose money
BlackBull Markets
Interactive Brokers
TMGMYou may lose more than your initial deposit. You don’t own, or have, any interest in the underlying assets.Top 10 ECN Brokers
- 1. FP Markets
FP Markets made a name for itself by offering a reliable service to traders who are looking to participate in the forex market. FP Markets’ ECN pricing is competitive, with clients having the option to trade with spreads from 0.0 pips.
Traders who are particular about which platform they utilize are very likely to enjoy what FP Markets has to offer, seeing as its selection of platforms is versatile. Users can go with either of the popular Meta Trader platforms or choose between options like TradingView and cTrader.
10 per quarter for non-AU traders; 20 per quarter and notional volume of AU$1,000,000 per 4 quarters in the last 1 year 73.85% of retail CFD accounts lose money Fusion Markets is licensed by the regulators of Vanuatu and Australia, the latter being one of the most trusted and highly regarded supervisory entities among traders. Moreover, the broker also ensures that client funds are segregated away from company money within HSBC and NAB, both of which are recognized as tier 1 banks. Suffice it to say that Fusion Markets checks all the boxes in terms of reputability. As Fusion Markets does not operate a dealing desk, the quotes offered to users are those of liquidity providers, and the broker boasts minimum spreads of 0.0 pips.
Gleneagle Asset Management Limited (ABN 29 103 162 278) trading as Fusion Markets, is the issuer of the Fusion Markets Products described in this communication. Trading in Fusion Markets Products involves the potential for profit as well as the risk of loss which may vastly exceed the amount of your initial deposit and is not suitable for all investors. You should read all of these Financial Product Service Terms, the Product Disclosure Statement (PDS) and the Financial Services Guide (available on our website) carefully, consider your own financial situation, needs and objectives for investing in these Fusion Markets Products and obtain independent financial advice.- 3. TMGM
TMGM clients are given two types of accounts to choose from, both of which are listed as having an ECN execution type. The first one is dubbed “Edge,” and it is TMGM’s premium option, with its spread starting at 0.0 pips. One may decide to go with the Classic account instead, which has wider spreads of 1 pip or above. As for what trading instruments one can trade at TMGM, forex pairs are available in abundance, and clients also have the opportunity to trade indices, energies, shares, and more.
The information provided on this website is general in nature only and does not constitute personal financial advice. Before acting on any information on this website you should consider the appropriateness of the information having regard to your objectives, financial situation and needs. Investing in CFDs and Margin FX Contracts carries significant risks and is not suitable for all investors. You may lose more than your initial deposit. You don’t own, or have, any interest in the underlying assets. We recommend that you seek independent advice and ensure fully understand the risks involved before trading. It is important that you read and consider disclosure documents before you acquire any product listed on the website. The information and advertisements offered on this website are not intended for use by any person in any country or jurisdiction where such use is contrary to the local laws and regulations. Products and Services offered on this website is not intended for residents of the United States. - 4. OctaFX
Established in 2011, OctaFX is a non-dealer desk broker that facilitates the trading of over 300 trading instruments, dozens of which are currency pairs that forex enthusiasts can trade. This includes both majors and exotics, and the lowest spreads have the potential to drop to 0.6 pips. In terms of platforms, OctaFX offers its own platform named OctaTrader, along with the industry staples MT4 and MT5.
The broker looks out for its clients, offering customer service via live chat, and its support team is ready to assist clients at any time. Excellent support is one of the various reasons OctaFX has managed to maintain an excellent Trustpilot score of 4.5.
- 5. IC Markets
IC Markets is regulated in a range of jurisdictions, boasting licenses from the FSA, CySEC, and ASIC. Thanks to this, the broker is available in languages like English, Italian, and Vietnamese, among others, with customer support via phone being available in plenty of countries. Of course, users may also choose to contact the support team by using live chat or email, with the former allowing for inquiries to be answered around the clock, seven days a week. IC Markets does not operate a dealing desk and described its prices as “true ECN.” Clients can, therefore, enjoy spreads that start from 0.0 pips.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 70.64% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. - 6. Global Prime
The year 2010 marked the debut of Global Prime, a broker that today stands as one of the more popular and trusted brokers when it comes to forex trading. It is licensed by Australia’s regulator, a tier 1 supervisory entity, as well as by the VFSC. Moreover, as a non-dealing desk broker, Global Prime has ensured users that they do not need to worry about Global Prime trading against them.
The live account types available are several, the first being the Standard Account, with spreads of 0.9 pips being the minimum. With a Raw Account, however, the ECN spreads start at 0.0 pips.
Global Prime is a trading name of FMGP Trading Group Pty Ltd (ABN 74 146 086 017) and is regulated by ASIC and licensed to carry on a financial services business in Australia under Australian Financial Services License No. 385620. Gleneagle Securities Pty Limited trading as Global Prime FX, is a registered Vanuatu company (Company Number 40256) and is regulated by the VFSC. The website is owned and operated by FMGP Trading Group Pty Ltd, ABN 74 146 086 017. - 7. Eightcap
If you are looking to trade forex, Eightcap, with its generous selection of currencies, will serve as an excellent broker. Indexes, commodities, and shares are also listed among Eightcap’s supported markets.
In terms of platforms, there are three options to pick from: MT4, MT5, and TradingView. You may deposit via bank cards, crypto, wire transfer, online banking, or Interac, regardless of your account type. Going with the Raw Account will give you access to the lowest minimum spread limit (0.0 pips), but do be aware that since the execution type here is ECN, a commission of $3.5 applies.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76.09% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Interactive Brokers’ roots date back to 1978 when it was founded by Thomas Peterffy, and it was in the 90s that the company launched its online services, with Interactive Brokers being used by many forex traders in the US and abroad to this day. Known today as IBRK, this broker offers trading on forex, stocks, and options, to name a few. The spreads are considered quite impressive as well, which is typically expected by users who choose to use ECN-based accounts.
Aspiring traders will find IBRK to have exceptional value in terms of education as on IBKRCampus there are plenty of courses, webinars, podcasts, and more, that can assist novices on their journey to becoming a forex trader.
Investing in financial products involves taking risk. Your investments may increase or decrease in value, and losses may exceed the value of your original investment.- 9. Saxo Bank
Available in English, Danish, Japanese, Polish, and other languages, while also being regulated by a range of trusted supervisory bodies, Saxo Bank is an international broker through and through. Its selection of trading instruments is great as well, and there are various accounts you can pick from, all boasting spreads of under 1.0 pip. Of course, if you are hesitant to take the plunge with Saxo Bank or are simply very new to trading, Saxo Bank also offers demo accounts so that you can practice without risking real money.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 65% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs, FX or any of our other products work and whether you can afford to take the high risk of losing your money. Black Bull Markets is suitable for various traders, seeing as it offers trading on markets like forex, equities, and indices, to name a few. Users are spoiled for choice in terms of platforms as well. Both popular MetaTrader platforms are supported by Black Bull Markets, and the same applies to TradingView and cTrader.
Depending on the type of account you choose to go with, the minimum spread will be set at either 0.8 pips or 0.1 pips for Standard and Prime accounts, respectively. There are also Institutional ECN accounts for high-volume traders. All account types come with a notable 500:1 leverage limit.
Comprehensive Comparison of the Top 10 ECN Forex Brokers
| Forex Broker | Min Deposit | Regulators | Account Types | Min Contact Size | Trading Platforms | Commissions | Min Spread | Inactivity Fee | Trust Pilot Rating |
|---|---|---|---|---|---|---|---|---|---|
| 1. FP Markets | $50 (AU$100) | ASIC, CySEC, FSA (Seychelles), FSCA | Standard, Raw, Pro Account | 0.01 | MetaTrader4, MetaTrader5, WebTrader, IRESS | $0 Standard Account $6 round turn on Pro Account | 1.0 pips Standard; 0.0 pips Raw | No | 4.8 ⭐ |
| 2. Fusion Markets | $0 | ASIC, FSA (Seychelles), VFSC (Vanuatu) | Classic, Zero, Pro Account | 0.01 | MetaTrader4, MetaTrader5, cTrader, DupliTrade, Fusion+ Copy Trade | $0 Classic Account $4.50 round turn on Zero Account | 0.9 pips Classic; 0.0 pips Zero | No | 4.8 ⭐ |
| 3. IC Markets | $200 | FSA (Seychelles), CySEC, ASIC | Raw Spread cTrader, Raw Spread MT, Standard MT | 0.01 | MetaTrader4, MetaTrader5, cTrader, ZuluTrade | $0 Standard MT $6 round turn on Raw cTrader $7 round turn on Raw MT | 0.8 pips Standard, 0.0 pips Raw Accounts | No | 4.8 ⭐ |
| 4. OctaFX | $25 | CySEC, MISA (Comoros) | OctaTrader, MetaTrader 5, MetTrader 4 | 0.01 | MT4, MT5, OctaTrader | $0 | 0.6 pips | No | 4.5 ⭐ |
| 5. Eightcap | $100 | SCB (No. SIA-F220), ASIC (No.391441), CySEC (No. 246/14), FCA (No. 921296) | Standard, Raw, TradingView Account | 0.01 | MT4, MT5, WebTrader, TradingView | $0 on Standard and TradingView Accounts; $7 round turn on Raw Accounts | 0.1 pips on Standard and TradingView Accounts; 0.0 pips Raw Accounts | No | 4.3 ⭐ |
| 6. Global Prime | $0 | ASIC (No. 385620), VFSC (No. 40256) | Standard Account, Raw Account, Professional Account | 0.01 | MT4 Desktop, MT4 Webtrader, MT4 Android | $0 Standard Accounts, $7 round turn on Raw Accounts | 0.9 pips Standard, 0.0 pips Raw | No | 4.1 ⭐ |
| 7. Saxo Bank | $0 Classic$200,000 + Platinum $1,000,000 + VIP | FCA (No. 551422), FSA Denmark (No. 1149), MAS (No. 200601141M), ASIC (No. 32110128286), SFC Hong Kong (No. 1395901), FSA Japan (No. 0104-01-082810) | Classic, Platinum, VIP | 0.01 | SaxoTraderGO, SaxoTraderPRO, TradingView | Commissions are built into spreads | 0.9 pips (Classic), 0.8 (Platinum), 0.7 pips (VIP) | No | 3.7 ⭐ |
| 8. BlackBull Markets | $0 (Standard)$2,000 (Prime)$20,000 (Institutional) | SFSA (No. SD045), FMA (No. FSP403326) | Standard, Prime, Institutional | 0.01 | MT4, MT5, TradingView, cTrader, MT WebTrader, BlackBull Shares, BlackBull CopyTrader, BlackBull Trade | $0 Standard; $6 per lot Prime; $4 per lot Institutional | 0.8 pips Standard; 0.1 pips Prime; 0.0 pips Institutional | No | 3.6 ⭐ |
| 9. Interactive Brokers | $0 | CFTC, CIRO, FCA, CBI, Central Bank of Hungary, ASIC, SFC (Hong Kong), SEBI, JSDA, MAS | IBKR Lite, IBKR Pro | 0.01 | IBKR Desktop, IBKR Trader Workstation, IBKR Mobile, IBKR GlobalTrader | $1 - $2 (varies according to traded volume) | From 0.1 pip | No | 3.5 ⭐ |
| 10. TMGM | $100 | ASIC, FMA, VFSC, FSC | Classic, Edge | 0.01 | MT4, MT5 | $0 Classic $7 round turn on Edge Account | 1.0 pips Claasic 0.0 pips Edge | $30 if balance drops below $500 or account is not used for over 6 months | N/A ⭐ |
Definition of an ECN Broker
ECN brokers are named that way due to their utilization of ECN technology. The term ECN stands for “electronic communication network” and is a computerized system that facilitates the matching of buy and sell orders automatically when it comes to local and global markets alike.
The said orders must be made by market participants for the ECN to be able to match them, and the trade is technically executed between the client and the bank or institution responsible for the quotes. As opposed to market makers, ECN brokers are not in a position where it is possible for them to trade against clients.
ECN technology has been around since the 60s, with Instinet being established in 1969, and many modern brokers operate strictly via ECN execution and do not have dealing desks. However, it should be noted that some market maker brokers have opted to offer optional ECN accounts to clients as well.
How Does ECN Operate?
ECN technology enables the automatic matching of buyers and sellers when it comes to trading. ECN brokers basically allow clients to trade based on the quotes offered by multiple liquidity providers, which the broker forwards directly to clients. A given broker will present traders with the best possible bid/ask quotes determined through consolidation, and this is why the utilization of ECNs is known to entail transparency.
We should also stress that since the system is automatic, traders who use an ECN account are enabled to trade outside the daytime trading sessions, i.e. when the market is closed. Of course, they are also suitable for the forex market, which operates 24/5. ECN technology is also characterized by its speed, which is another key characteristic of ECN brokers.
The above factors result in traders being able to enjoy far narrower spreads in comparison to other types of forex brokers, but it also makes operating via ECN execution costlier for brokers compared to alternatives. This, in turn, necessitates brokers to recoup the increased costs by charging traders higher fees.
ECN Brokers vs. Dealing Desk Brokers vs. STP Brokers
Experienced traders will recognize two major types of brokers when it comes to the execution type they utilize, starting with dealing desk brokers (DDs). As suggested, these brokers operate a dealing desk, and they are generally referred to as market makers.
They can dictate the prices of the market and generate quotes, and they make a profit through the spreads. This is why trading with a market maker will usually entail dealing with relatively wide spreads. It is possible for market markers to internalize the risk of a trade by holding the counter position, in which case the broker will technically profit should the trader lose. This has caused worry of conflict of interest among forex enthusiasts, hence why some avoid market makers. Externalizing the risk is also an option, which is achieved by passing it to another liquidity provider (LP).
Finally, traders must be aware that market makers are the only type of broker that can re-quote client orders. Re-quotes when a broker is no longer able to provide the initially quoted price, and they then notify the trader to offer an updated price.
The second major category encompasses non-dealing desk brokers, known as NDDs. They execute trades via either ECN or STP technology.
In contrast to market makers, brokers with ECN execution do not make money from the spread. However, we should reiterate that trading with the usage of ECN technology involves extra costs. These take the form of quote markups and commissions. As you are not technically dealing with the broker, there are no concerns surrounding potential conflict of interest here.
Straight through processing (STP) brokers are similar to ECN ones in the sense that they, too, do not operate a dealing desk. However, unlike ECN technology, STP is actually the intermediary that communicates with liquidity providers. In other words, with an STP broker, you will not be trading with the LPs directly. STP brokers bear a slight resemblance to market maker brokers as well, since the spread is how they make money.
Advantages and Disadvantages of ECN Brokers
As is the case with all broker types, those that utilize the ECN execution method have both advantages and downsides that traders must be aware of before they create an account at a given broker.
Key Pros
- Clients will seldom experience delays while trading
- Known for having very low spreads that may reach 0.0 pips
- Conflict of interest risks are absent
- Clients are presented with the best bid and ask prices
Key Cons
- ECN accounts typically require a notable initial deposit
- Notable commissions and other fees will apply