Dealing Desk

A dealing desk (DD) is a function within a broker through which the firm processes client orders by acting as counterparty rather than routing them to external liquidity providers. The broker quotes its own bid and ask prices, accepts the trades, and manages its own exposure — either by holding the risk on its own book or by hedging externally in aggregate. This contrasts with no-dealing-desk (NDD) models, where orders pass through to external markets. Dealing-desk brokers typically earn through the spread they quote rather than a per-trade commission.

In plain English — When you trade with a dealing-desk broker, the broker itself takes the opposite side of your position. Your buy order becomes the broker's sell, and vice versa. The broker profits when your trade loses and loses when your trade profits — an inherent conflict of interest that traders should be aware of. Dealing-desk brokers often offer fixed spreads during normal market conditions, which provides predictability, but those spreads are usually wider than raw interbank rates. The model is also called a market-maker model, because the broker makes the market for its clients internally.

A trader places a buy order for EUR/USD at the broker's quoted ask of 1.08510. With a dealing-desk broker, no external order is sent; instead, the broker's internal desk records the trade and is now short EUR/USD against the client. The broker later decides whether to hedge that exposure with a bank or absorb it on its own book. The spread between the broker's bid (say 1.08490) and ask (1.08510) — a 2-pip spread — represents the broker's immediate revenue on the trade.