Agency Model Forex brokers

What exactly is “Agency model” Forex broker?

“Agency model” is just a fancy name for “No Dealing desk”. That’s it. Simple, straight.

In other words, in Forex there is Agency model dealing and Principal model dealing.
Agency model = No dealing desk (STP, ECN, DMA)
Principal model = Dealing desk (Market maker)

Where did it all come from?

Never popular before, the term “Agency model” has been re-introduced around 2012-2014.

A few large Forex brokers simply announced that they’re now turning away from Market Maker practices and into an Agency Model dealing.

This sure sounded attractive to all newcomers, who barely understood what “Agency Model” means, but at least it was clear that there will be no more Dealing desk (Market making) involved. And that fit the bill.

Agency model Forex brokers list

Rank
Broker
Special Offer
Min Deposit
Spreads From
Rating
Max Leverage
Regulations
Support
Start Trading
1
No commissions
$50
0.8 PIPs
30:1
CIMA, NFA, CFTC, FCA, IIROC, ASIC, FFA Japan, MAS, SFC of Hong Kong
Forex trading involves significant risk of loss and is not suitable for all investors.
1
Spreads From 0.8 PIPs
Max Leverage 30:1
Min Deposit $50
Register now
2
Lifetime demo account
$250
0.1 PIPs
30:1
CFTC
2
Spreads From 0.1 PIPs
Max Leverage 30:1
Min Deposit $250
Register now
3
Same Day withdrawals
$10
1.2 PIPs
500:1
3
Spreads From 1.2 PIPs
Max Leverage 500:1
Min Deposit $10
Register now
4
EUR/USD from 0.5 pips
$200
0.5 PIPs
30:1
CySEC, FCA
eToro USA LLC does not offer CFDs and makes no representation and assumes no liability as to the accuracy or completeness of the content of this publication, which has been prepared by our partner utilizing publicly available non-entity specific information about eToro. eToro is a multi-asset platform which offers both investing in stocks and cryptoassets, as well as trading CFDs. Please note that CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 66% 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.
4
Spreads From 0.5 PIPs
Max Leverage 30:1
Min Deposit $200
Register now

This will be a long list, since it includes all NDD Forex brokers: STP, ECN/STP and DMA/STP.
To narrow down your search, please use our Advanced Broker Search Tool

How “Agency model” works

In the FX market, the Agency model Forex brokers act as agents. They accept orders from clients and send them to the liquidity providers. By being a simple intermediary, agency model brokers don’t execute trades themselves, and hence have no conflict of interests with their clients and partners.

On the contrary, Principal model brokers will accept and execute clients orders themselves, thus acting as a principal = a dealing desk, and here the conflict of interests can arise.

Hybrid model (Agency + Principal)

Nowadays, many brokers have chosen a Hybrid model (Agency + Principal dealing).

In the Hybrid model, instead of being a simple intermediary (a so called “corridor” between clients and liquidity providers),
Hybrid Forex broker executes 2 trades with each side: first he fills clients orders himself as a Principal, and then goes to the liquidity providers to executes another trade with them, hence acting as an Agent this time.

An example of the Hybrid model these days would be FxPro:
Quote: “FxPro’s execution model works in the following manner: the flow of trades is internalized before any positions/trades are externally hedged. The internalization process is based on very rigorous and detailed risk management techniques centered on many risk parameters, which are continuously evaluated and monitored by the senior management.”

Many brokers found Hybrid model being more commercially viable than pure Agency model.

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