Dealing Model
HOW WE EARN MONEY
Markets Invest makes money from commissions, swaps, and interest. We do not make money from client losses!
We believe in greater transparency between brokers and their clients
For Markets Invest, this means explaining exactly how we make money, how our clients’ trades are executed, and with whom, so traders can make an informed decision about whether or not they want to do business with us.
Markets Invest is an ECN, STP, and NDD broker.
How we generate income
- Commissions - We charge commission on Forex and Metals trades of $7 USD per round turn lot.
- Spreads - We can generate spread income by adding a mark-up to the market price. Alternatively, spread revenue could represent the difference between the price we execute your trade and the price that we hedge it. This could happen on small trades that we batch hedge (see Best Execution) or on our Index and Commodity CFD products which go to an external liquidity provider.
- Swaps - We apply a small spread to the swap rates that we receive from the interbank market for swap rates on Forex and Metals trades.
- Interest - We apply a small spread to the interest rates that we receive from liquidity providers for index and Commodity CFD trades.
How we make money per asset class
| Asset Class | Commissions | Spreads | Swaps & Financing | B-book (trader losses) |
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Forex |
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Metals |
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Indices* |
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Energies* |
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*Markets Invest uses ‘non-bank market makers’ (non-banks) and brokers to price and executes Indices and Energies trades. Markets Invest earns a percentage of the spread from these trading counterparties. These counterparties do not run a B-book for Markets Invest.
- Our list of non-banks can be found in the trading counter-parties section of our best execution page.
- See bottom of page for full disclosure on non-bank spread earnings.
Margin call / Stop out levels
Does Markets Invest profit from client losses?
No. Unlike the majority of Forex and CFD providers, we do not profit from client trading losses, nor do we run a B-book. Markets Invest is an ‘A-book’ broker, which means we hedge all market risk and therefore don’t stand to gain from client losses.
We utilize the ‘A-book net’ dealing model for small Forex and Metals trades that are below our prime broker minimum in order to reduce minimum ticket fees. It is possible for Markets Invest to make a profit on these small forex and metals trades, when a client has made a loss, but only in specific scenarios. These scenarios are incidental and the exception rather than the aim of the A-book net model.
Examples of when this can occur are:
- If we accept an order from a client and then hedge that trade at a better price
- If a client opens and closes a small trade, in quick succession, before we hedge it, and this trade closes in a loss. It is incorrect to say we profit from client losses for several reasons, namely:
- In the case of scenario 1, if there is a loss then it is only over a specific time horizon, i.e. it is an open trade and an unrealised loss, and they could close the trade in a profit.
- In the case of scenario 2, since all market risk is hedged by Markets Invest, we do not, in the aggregate, stand to gain or lose from market movements, and our profit is not contingent on clients losses or clients losing.
- We do not profile, classify, or segregate clients into different books or make hedge execution decisions based on client profitability or trading behaviours. This simply means that we are not taking measures to monetize the process by skewing the odds in our favour, i.e. batch hedging of small trades is a fee preventing/cost reducing exercise and is not designed as a profit center.
Spread earnings on CFDs
- Unlike Forex and Metals which are traded via a ‘prime broker’, Indices and Commodity CFDs have no central counterparty through which trades are given up and cleared. Because of this, all trades generally go to a single liquidity provider on a per product basis. This means these products are not ECN.
- Markets Invest has measures in place (covered on the best execution page) to ensure the prices we receive from our CFD liquidity providers are consistent with other providers, and that our spreads are among the best in the market.
- Markets Invest uses ‘non-bank market makers’ and other brokers to price and execute Index and Commodity CFD trades. Markets Invest earns a percentage of the spread after hedging costs from these trading counter-parties. These counter-parties do not run a B-book for Markets Invest.
Frequently Asked Questions
Markets Invest makes money from commissions, spreads, swaps and interest. We do not profit from client losses.
Markets Invest’s LP’s consist of Tier-1 banks, non-bank market makers, ECNs and dark pools. Some of our LP’s include the following: Goldman Sachs, Saxo Bank, Deutsche Bank, BNP PARIBAS, UBS, LMAX, XTX, CREDIT SUISSE, HSBC, Natwest, STANDARD CHARTERED BANK, Vidarr Capital, Citadel Securities.
All FX/Metal trades > 50,000 are executed in the real market directly and will be filled by our LP’s.
FX Trades < 50,000 are executed in the real market once the net position of small trades exceeds the batch hedge size. This is due to the high cost to hedge individual small trades.
All CFD trades go to our non-bank market makers who specialise in indices and commodities trading to ensure the tightest prices and best execution.
B-book brokers take the opposite side of clients positions and assume the role of market maker. What this means is that clients trades are not hedged in the real market. This means the broker profits when the client loses, creating a clear conflict of interest between broker and client. B-book brokers have a vested interest in the client losing money as this becomes their profit.
An A-book broker is a broker that executes all clients trades in the real market. In this model, the broker has no interest in clients losing as client losses are not earned by the broker. There are fewer conflicts of interest between A-book brokers and their clients, and when the clients win, the broker is better off – as they are making the broker commissions.
Markets Invest does not run a B-book. This means that we do not profit from client losses or trade against our clients. We believe the role of a broker is merely to act as the intermediary between the banks.