When entering the trading industry, one of the first concepts you’ll come across is the brokerage model — the framework that defines how a broker handles its clients’ trades.
At its core, this comes down to a crucial decision:
Will your company act as a market maker, executing trades internally, or connect clients directly to liquidity providers?
This choice shapes everything from your technology setup to your risk management approach — and it ultimately boils down to two main models: Dealing Desk (DD) and No Dealing Desk (NDD) brokers.
Dealing Desk (DD) Brokers Explained
Dealing Desk (DD) brokers — often called market makers — create their own market for clients. In this model, the broker takes the opposite side of a client’s trade: when a trader wants to buy a currency pair, the broker will sell it directly from their own inventory.
Here’s how the process works:
- Order placement. A trader places an order — for instance, to buy or sell a currency pair — and a broker receives it through their trading platform.
- Internal execution. The broker’s dealing desk can either match your order with another client’s trade or execute it internally — in other words, take the opposite side of your trade using the broker’s own liquidity, without routing it to external market participants.
- Profit from spreads. The broker earns revenue from the difference between the bid and ask prices, and may sometimes add a small markup.
- Risk management. To balance exposure, brokers may hedge larger positions with external liquidity providers, though most smaller trades are settled in-house.
No Dealing Desk (NDD) Brokers Explained
No Dealing Desk (NDD) brokers take a different approach — instead of creating their own market, they connect traders to external liquidity providers, such as banks, hedge funds, or exchanges. This setup allows clients to access real market prices without the broker acting as a counterparty.
Here’s how it works:
- Direct market access. When a trader places a trade, it is automatically routed to one or several liquidity providers who compete to offer the best available price.
- Transparent pricing. Since the broker doesn’t control bid and ask prices, spreads typically remain tight. However, the broker may use specialized solutions — such as Takeprofit Bridge — to add a small markup or manage commissions on top of the raw liquidity feed.
- No conflict of interest. The broker’s revenue comes from commissions, or small markups on the spread — not from client losses — which aligns their interests more closely with the trader’s success.
Pros and Cons of a Dealing Desk Broker
| Pros | Cons |
|---|---|
| Stable spreads – traders know exactly what to expect, even during volatile markets. | Potential conflict of interest – since the broker may take the opposite side of client trades. |
| Fast execution – orders can be filled instantly from the broker’s own liquidity. | Limited market transparency – prices are generated by the broker, not from external liquidity providers. |
| Lower trading costs for small accounts – brokers can set tighter spreads and offer smaller trade sizes. | Requotes or order rejections – can occur when market prices move too fast. |
| Better control over risk management – the broker can hedge exposure internally or externally. | Forbidden or heavily restricted in some jurisdictions – such as the United States, Canada, Japan, and several European countries including Germany and France. |
| Not ideal for scalpers or high-frequency traders – execution may be delayed during high volatility. |
Pros and Cons of a No Dealing Desk Broker
| Pros | Cons |
|---|---|
| Direct market access – clients’ orders are sent straight to liquidity providers without broker intervention. | Higher infrastructure costs – connecting to multiple liquidity providers and maintaining bridge solutions can be expensive. |
| Transparent pricing – traders see real market quotes with minimal manipulation. | Variable spreads – spreads can widen significantly during periods of low liquidity or high volatility. |
| No conflict of interest – the broker doesn’t trade against clients, aligning incentives with traders’ success. | Revenue depends on volume – profitability relies on trading activity and may require higher commissions or markups. |
| Scalability – NDD can handle higher volumes efficiently. | Greater dependence on technology – execution quality relies heavily on bridge stability and liquidity provider performance. |
| Initial deposits with liquidity providers – which means a higher starting budget. |
How to Choose the Right Model for Your Startup
Selecting between a Dealing Desk (DD) and No Dealing Desk (NDD) model is one of the most critical decisions for a new brokerage. Your choice will shape your technology stack, regulatory requirements, revenue structure, and client experience.
Here’s a step-by-step approach to making the right decision:
1. Define your target audience
Start by identifying who your clients will be.
Are you focusing on retail traders, who value fixed spreads and instant execution, or professional clients, who prefer raw pricing and deep liquidity?
Understanding your audience’s trading style and expectations will guide your model choice.
2. Evaluate your risk appetite
A Dealing Desk model allows greater control over execution and spreads but involves taking on market risk.
An NDD model, on the other hand, passes that risk to liquidity providers.
Decide how much exposure your startup is willing — and financially able — to handle.
3. Consider regulatory requirements
Different jurisdictions have different rules.
If you plan to operate in highly regulated regions (like the U.S., Canada, Japan, or the EU), you’ll likely need an NDD or hybrid structure to stay compliant.
In offshore jurisdictions, both models are typically allowed, but transparency and best-execution policies are still expected.
4. Assess your technology infrastructure
NDD model requires robust connectivity to liquidity providers, often via solutions like Takeprofit Bridge or other FIX-based gateways.
However, it also demands initial deposits with liquidity providers, which means a higher starting budget compared to a Dealing Desk setup.
DD models, in contrast, demand strong risk management systems and internal trade monitoring tools like Takeprofit Dealing Desk.
Your available technology and budget will play a key role in determining feasibility.
5. Plan your revenue structure
Ask yourself how you want to earn: through spreads, markups, or commissions.
DD brokers typically rely on spreads and internal hedging; NDD brokers earn through transaction volume and transparent fees.
Your pricing strategy should align with your long-term business goals.
6. Think about scalability
As your client base grows, will your model scale easily?
NDD setups can handle higher volumes efficiently, while DD models may require more manual oversight.
Consider the long-term sustainability and automation potential of your chosen approach.