HOW FOREX ORDERS ARE PROCESSED
*Each FCM/Dealer has its own procedures for processing customer orders. The information below is provided for informational purposes only.
The forex FCM/Dealer will generally handle customer orders in one of two ways:
Immediate Offset of Customer Orders. The forex FCM/Dealer may choose to immediately offset customer orders with another counterparty in the interbank market. Depending on the FCM/Dealer, the FCM/Dealer may be compensated through the bid/ask spread and/or charge the customer a commission per transaction. By immediately offsetting customer orders, the FCM/Dealer effectively attempts to reduces its risk exposure by not holding open positions (the other side of customer trades) in its own book.
Working Customer Orders via a Trading Desk. The forex FCM/Dealer may choose to work customer orders in the open market via a trading desk. In simplest terms, once an FCM/Dealer takes the other side of a customer order, the open position is routed to a trading desk operated by the FCM/Dealer. The traders on the trading desk then attempt to profit by trading the open position in the interbank market or within its own trading book.
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