What Type of Broker is eToro
eToro is a broker that has consistently managed to develop proven, cutting edge fintech technologies that provide its traders with powerful, intuitive tools that optimise their trading performance.
On the eToro platform, traders have immediate access to executable rates from the inter-bank market, futures and stock exchanges, without intervention or manipulation, enabling them to trade almost any amount as if they were a hedge fund.
eToro uses both STP (Straight-Through-Processing) technologies and NDD (No Dealing Desk) practices, which means all trades are executed in real-time, with no interference. To enable fractional ownership of assets, eToro uses the Market Maker model, which offers high liquidity (buying and selling multiple assets quickly without prices being affected). eToro always strives to give its clients prices that reflect real-world market price.
Since most of eToro assets are traded using CFDs, they enable high liquidity, fractional trading, and “sell” (short) orders.
How does this broker type benefit eToro clients?
In simple terms, this means that several of the largest financial institutions provide price feeds and liquidity to eToro. As a regulated broker, eToro does not manipulate prices, and simply uses the common practice of adding a markup as commission – which is how eToro makes money. eToro provides the best and most competitive buy and sell prices to clients. eToro works diligently to maintain its exceptional trade filling rate for its traders.
What is an STP?
Potentially, anyone in the world could apply for a broker’s licence and get access to the trading floor of any particular stock market. However, the fees involved are so exorbitant, that this privilege is reserved for financial institutions, such as banks and investment firms.
STP (Straight-Through-Processing) essentially gives you direct access to these markets, since eToro has the access, and licensing to do so. This means that when you make a transaction on the eToro platform, it is processed as if it was placed at that moment in the corresponding market.
What is an NDD?
A No Dealing Desk practice means that no intermediary can change prices between you and the market. Whenever an order is given by the end-user on the eToro platform, and providing that it is done during active market hours, that deal is automatically transferred and processed. eToro can’t alter prices during the process – however, prices are subject to change due to market fluctuations.
How does eToro use NDD and STP?
eToro can offer high-quality execution thanks to our combination of STP and NDD. This means the aggregated exposure of some trades is automatically forwarded to first-tier liquidity providers in real-time, just like banks and financial corporations. In other cases, eToro may choose to absorb some exposure in a trade.
eToro's traders can be sure that there is no manual interference in a trader’s position, nor any price manipulation. It is this technology that creates a no-conflict ecosystem in which eToro believes in its traders’ ability to generate consistent returns.
As a regulated company, eToro is monitored in all aspects by the FCA, CySEC and ASIC.
This is one of the primary reasons eToro is the go-to trading platform for millions of registered users worldwide.