Bulgarian based Deltastock, a fairly large broker in East European standards, has just announced that it launched its own ECN/STP service. Although the press release and the website are full of misrepresentations such as “the first true ECN/STP solution for retail clients” and enigmatic statements such as “It must be kept in mind that Deltastock remains a counterparty to client trades, regardless that it acts as intermediary, since the orders are routed to the liquidity provider or on behalf of a client.” – it is still an interesting attempt by a small broker to establish some kind of an independent ECN or STP service to retail clients.
Obviously Deltastock isn’t the first or the second ‘true’ ECN/STP (contrary to the PR they admit this in the demonstration video) as there are plenty of others who offer this solution to their clients: FXOpen, Dukascopy and MB Trading to name a few. Of course there are also much larger venues which are not designed for the average retail trader. Whereas FXOpen allows for ECN execution through Dukascopy and MB Trading through 3dforex it seems that Deltastock has taken a somewhat different approach by offering a hybrid ECN/technological solution which allows to execute through a specific Liquidity Provider or with Deltastock itself.
It seems that Deltastock is trying to be both an ECN and a technological solution for retail traders and it doesn’t make a lot of sense to me for the following reasons:
First of all Deltastock is offering only Interactive Brokers and FXCM (it also offers itself and dbFX which in turn is FXCM’s White Label so not a huge difference there) as Liquidity Providers. With all the respect to Deltastock, FXCM and dbFX this doesn’t really provide too much liquidity to traders and can’t compete with Dukascopy for instance which aggregates more than 20 LPs.
Secondly Deltastock doesn’t aggregate and/or filters orders and prices as a real ECN should do by a default, it does offer some kind of an aggregation by choice which is called SMART but once again if it only aggregates prices from 2-3 LPs it’s not really exciting or very useful.
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Thirdly, Deltastock isn’t a pure technological execution provider like Integral and by listing itself amongst the few LPs, as well as using the aforementioned enigmatic wording regarding the execution, it seems to me that it might have an interest or two to keep some of the trades in house.
Lastly, by trying to be both an ECN and a technological venue Deltastock has produced what seems to me a very complicated solution for a trader – the front-end seems like an institutional platform or a retail platform back-end, making adaptation to the platform a pretty difficult task whereas retail traders, whom Deltastock is trying to capture here, prefer something much more simplified. Most of traders, even the sophisticated ones, still prefer a simple Buy/Sell interface and currently they have other, better, ECN options to choose from.
Let’s also not forget that Deltastock’s platform isn’t an MT4 which is another reason why I don’t see this solution becoming hugely popular with retail traders. ECNs are a great solution for successful and profitable traders – these traders tend to use Expert Advisors to automate some or all of their trading decisions and therefore won’t be able to migrate to this platform even if they wanted to.
Having said all that, I do think it’s a worthy try by a broker who’s trying to make it on its own and my only hope is that many more brokers will follow this ECN route and start offering similar, and hopefully more elegant, solutions to their clients.