No Conflict of Interest
A clear and straightforward regulatory status (i.e. license) is probably one of the most important factors to look for whenever considering and assessing the level of conflict of interest, transparency, integrity and safety of client funds that may affect your experience when selecting a retail broker of choice.
At JFD Brokers we are exclusively licensed as a Matched Principal Broker (100% DMA/STP Agency Model), which may not hold any proprietary positions, has no exposure, and is therefore only acting as an intermediary between its clients, Liquidity Providers and major exchanges, hence strictly operating a commission-based revenue model.
If the vast majority of retail brokers, including those extensively promoting ECN/STP/NDD/DMA operations via PRO or DIRECT trading accounts, do hold the permission to “make the market” (i.e. to deal on own account), at JFD Brokers, we deliberately chose not to be authorised and licensed to conduct market making activities, therefore we have no rights to operate any Dealing Desk (not even partially), no conflict of interest with our clients, and for those who may still have any doubts this is verifiable on the CySEC, FCA, ACP and BaFin websites.
Any broker promoting Direct Market Access (DMA), Straight Through Processing (STP), Electronic Currency Network (ECN), Non Dealing Desk (NDD), or PRO/DIRECT trading accounts may nevertheless “make the market” even if only partially (i.e. pass 50% of clients’ orders to the interbank market and hold on their B Book the other 50%) as and when they wish. In theory, there is nothing wrong with this configuration as long as the broker runs an ethical business. In practice, regulators such as the NFA and the FCA have both demonstrated condemnable practices conducted against clients’ interests by brokers claiming ECN/STP/NDD/DMA operations. The temptation to manipulate pricing and execution in the sole interest of the broker’s bottom line remains a regular practice.
At JFD the equation is straightforward: the more our clients trade, the more profitable they are, the more loyal they are, and the more successful we shall be in turn. We are strictly in business to match and exceed our clients’ expectations; their interests are our main and sole interest, full stop.
Post-Trade Transparency is also one of the most important factors to look for whenever considering and assessing conflict of interest, transparency, broker integrity and safety of client funds.
JFD Brokers protects its clients’ interests by granting them full transparency, both Pre-trade (i.e. no spread mark-up), where we pass to our clients the exact same spreads we receive from our Liquidity Providers, with the EUR/USD spread often averaging 0.1 pip; and Post-trade (i.e. full execution reports): upon clients’ request we systematically present the name of the Liquidity Provider which filled their trade, how fast (execution times are often below 2 milliseconds), at what price and at what time. This is how transparency should be understood and implemented, that is how the MiFID Directive sees it, and that is precisely how we believe any retail broker should operate. Anything else cannot be qualified as transparent by MiFID standards.
In addition, we protect our clients’ positions and strategies with full anonymity at the interbank market level. Unlike with Market Makers, without any exception 100% of our clients' trades are DMA/STP to the marketplace, and most importantly our clients' identities and orders are kept 100% anonymous ( including Take Profits and Stop Losses limit orders) from our Liquidity Providers. This minimises any information leakage risk, which is the absolute protection against unethical brokerage practices such as Stop Hunting.
No Requotes & Price Improvement
There are two standard ways to execute trading orders: “Fill or Kill” or “Fill or Fill”. The vast majority of Market Makers do not enable “Fill or Fill” and instead abuse the “Kill” by forcing a few seconds of delay in the execution of an order, just enough to allow price movement and justify a requote. Clients’ winning trades are most notably affected by requotes. In effect, Market Makers prevent their clients from generating profits.
Such practices have been condemned several times by international regulators such as the NFA (as reported online, the NFA fined “world-class” Market Makers for systematically delaying up to 5 seconds trades which earned over USD 2000,). We, at JFD Brokers, do not support such practices, but rather condemn them vigorously.
Every single one of our clients’ orders are systematically Straight Through Processed to our Liquidity Providers on a "Fill or Fill" basis (i.e. no requotes) with both positive and negative slippage enabled (i.e. no broker intervention). We pride ourselves for being able to provide upon request all relevant Post-Trade Execution Reports presenting Execution Times (often averaging below 2 milliseconds) and naming which Liquidity Providers filled our clients’ orders.