How Does icmarkets.com Work?

icmarkets.com operates as a Non-Dealing Desk (NDD) broker, primarily through a Straight Through Processing (STP) and Electronic Communication Network (ECN) model, particularly for its “Raw Spread” accounts.

This means that instead of acting as a market maker and taking the opposite side of a client’s trade, IC Markets Global routes client orders directly to a network of liquidity providers (major banks and financial institutions). When you initiate a trade, for example, to buy EURUSD, IC Markets finds the best available price from its liquidity pool and executes your order at that price.

Their profit is typically derived from a small commission charged per lot traded, rather than from the spread markup.

This setup aims to provide greater transparency and faster execution, as there is no internal “dealing desk” to delay or manipulate prices.

However, the underlying mechanism remains the facilitation of speculative contracts for difference (CFDs) across various asset classes, which inherently involves features like leverage and overnight interest, raising significant ethical concerns.

The ECN/STP Model Explained

IC Markets operates primarily on an ECN (Electronic Communication Network) and STP (Straight Through Processing) model, especially for its Raw Spread accounts.

• ECN (Electronic Communication Network): This system directly connects traders to liquidity providers (LPs) like banks, hedge funds, and other financial institutions. All participants can see the best bid and ask prices from different LPs. IC Markets aggregates these prices to offer its clients the tightest possible spreads.
• STP (Straight Through Processing): This means that client orders are routed automatically to the liquidity providers without any manual intervention from the broker’s side. This eliminates potential conflicts of interest that can arise when a broker acts as a market maker.
• No Dealing Desk: Unlike dealing desk brokers who often take the opposite side of client trades, IC Markets, as an NDD broker, aims to profit from commission fees and not from client losses. Their incentive is to have active, high-volume traders.
• Benefits for Traders: This model often results in tighter spreads, faster execution, and reduced requotes, making it attractive for scalpers and automated trading systems that rely on precise entry and exit points.
• Ethical View: While technically more transparent in execution, the ECN/STP model does not fundamentally change the speculative nature of CFDs or remove the elements of riba (e.g., swap fees) associated with holding leveraged positions. It merely optimizes the process of engagement in an ethically problematic activity.

The Role of Liquidity Providers

At the heart of the ECN/STP model are the liquidity providers (LPs) that supply the real-time pricing and market depth.

• Aggregated Liquidity: IC Markets aggregates quotes from multiple top-tier liquidity providers, such as major banks (e.g., JPMorgan, Goldman Sachs, Citibank) and dark pools. This aggregation ensures deep liquidity and competitive pricing.
• Best Bid/Ask: The system automatically selects the best available bid price (highest price a buyer is willing to pay) and ask price (lowest price a seller is willing to accept) from this pool.
• Speed and Depth: Deep liquidity means that even large trade orders can be executed quickly with minimal slippage, ensuring that the price a trader sees is largely the price they get.
• Impact on Spreads: The competition among LPs in the aggregated pool is what allows IC Markets to offer “raw spreads” that can be as low as 0.0 pips on major currency pairs.
• Dependence on External Markets: The broker’s ability to offer competitive pricing and execution is directly dependent on the efficiency and depth of the interbank market and its relationships with these liquidity providers.

How Trades are Placed and Executed

The process of placing a trade on icmarkets.com, once an account is funded, is designed to be straightforward and rapid.

• Platform Access: Traders use one of the available trading platforms (MetaTrader 4, MetaTrader 5, cTrader, or WebTrader). These platforms display real-time market prices.
• Order Types: Traders can place various order types: market orders (execute immediately at current price), limit orders (execute at a specified price or better), and stop orders (trigger a market order when a certain price is reached).
• Leverage Application: When a trade is placed, the chosen leverage automatically applies, meaning only a fraction of the total trade value (the margin) is required from the trader’s account.
• STP Execution: The order is then immediately and automatically routed via STP to the liquidity providers. The best available price is matched, and the trade is executed.
• Commission Structure: For Raw Spread accounts, a commission is charged per lot traded (e.g., $3.50 per standard lot per side on Forex). This is how the broker profits from the trade volume.

Funding and Withdrawal Mechanisms

The website highlights “Instant Deposit” and “Fast Withdrawal” with “0% Commission Payment methods.”

• Deposit Methods: Typically, brokers offer a wide range of deposit options including bank wire transfers, credit/debit cards, e-wallets (like Neteller, Skrill, PayPal), and potentially local payment solutions.
• Withdrawal Process: Withdrawals usually follow a similar path but might have varying processing times depending on the method and internal verification procedures. Bank transfers tend to take longer than e-wallet withdrawals.
• Security of Funds: Regulated brokers are typically required to segregate client funds from the company’s operational funds in separate bank accounts. This ensures that client money is protected in case the broker faces financial difficulties.
• Commission on Payments: While the homepage states “0% Commission Payment methods,” it’s important for users to check the specific terms, as some third-party payment providers might still charge fees, or certain methods might have limits.
• Ethical Reflection: The convenience of funding and withdrawing facilitates engagement in the ethically problematic trading activities. While efficient, it does not address the underlying ethical concerns of how the money is being used.

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