Based on how the broker connects a client and the liquidity provider, NDD brokers can be divided into two:
STP brokers: They run their client’s order through several liquidity providers who have interbank market access. They rank the bid/ask quotes provided by the liquidity providers according to the prices and adds a small mark-up to earn. Therefore, each broker has different spreads.
ECN brokers: They use electronic platforms to let the participants trade with each other. They earn through small commissions.