Non-Dealing Desk (NDD) Definition
NDD or Non-Dealing Desk is a term used by forex brokers to identify themselves as a broker who does not operate a dealing desk. Although the financial markets can’t exist without dealing desks existing somewhere, a Non-Dealing Desk broker is generally considered a good thing by retail traders due to the reduced conflict of interest.
Dealers, like traders, are in the market. They buy from and sell to their own clients and also buy from and sell to other market participants. Dealers are traders themselves. Their objective is to make money from their clients and their own trading activities. A conflict of interest naturally arises from this relationship. Dealers are able to quote, requote, reject and partially fill their client’s orders. Not only do dealers have these tools, but they also have a clear picture of the sentiment of their clients, they see all the orders coming through which their clients are completely oblivious to. This makes dealers far more privileged than their clients. While this all seems quite murky, these days it’s not.
Dealing Desks in this day and age are no longer operated by humans making decisions on a case by case basis. They are algorithms that have been developed to react according to specific criteria. Moreover, brokers must abide by very strict execution guidelines and regulatory reporting guidelines. Brokers cannot simply do what they want and keep the scales forever tilted in their favour.