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STP (Straight-Through Processing)

By Jarosław Wasiński • Published: • Updated:
Straight-through processing: automated electronic processing of transactions with limited manual intervention. In retail FX marketing it often refers to routing or hedging with external liquidity providers. The label alone does not establish the contractual counterparty, prove that every trade is hedged externally or eliminate conflicts of interest. Read the execution policy.
Example. A provider electronically hedges a client exposure with a liquidity provider while remaining the client’s contractual counterparty. That arrangement can use STP technology without turning the client contract into an agency trade.

Processing, hedging and legal role are different

Automation describes how instructions are handled. A-Book and B-Book describe aspects of risk handling. Principal and agent describe legal roles. Do not infer one solely from another or from a variable spread.

What to compare

Read the execution policy and compare commissions, markups, financing, rejected orders, positive and negative slippage, and treatment of gaps. External hedging does not remove all conflicts, including incentives to encourage excessive trading.

Reference: FCA: CFD business models and conflicts. Checked 8 September 2026; verify later changes before relying on jurisdiction-specific rules.

Separate rejections and fills

An automated request can still fail a price, credit, margin or eligibility check. Track acknowledgement, rejection and actual execution separately. Evaluate the stated policy and the resulting deals rather than assigning guaranteed execution or a legal role from the processing abbreviation.

FAQ

Does STP guarantee better fills?
No. The result depends on liquidity, order size, systems and contractual terms. An execution label is not a guarantee.
Do variable spreads prove external routing?
No. An internalising provider can also quote variable spreads or offer positive slippage.

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Jarosław Wasiński

Editor-in-chief, ForexMechanics.com • Macro & FX analyst

Independent analyst and practitioner with over 20 years of experience in financial markets. Actively involved in Forex since 2007, with a focus on fundamental analysis, OTC market structure, and disciplined capital risk management.

  • Creator and editor-in-chief of MyBank.pl, providing reliable financial education since 2004.
  • Author of hundreds of in-depth market commentaries, structural analyses, and educational materials for traders and investors.
  • Advocate for market transparency, promoting education grounded in hard data and institutional reports (BIS, ESMA, CFTC).

All content is educational and informational only – it does not constitute investment advice or a recommendation. Remember: leveraged trading (Forex/CFD) carries a high risk of rapid capital loss.