One difference between the broker and the dealing center
To begin with, it is worth deciding what exactly is meant by the DC and the broker and what differences exist between them. DC is an organization that essentially deals with accepting bets on the outcome of events, namely raising or lowering the rate of an asset. The rates of individual players (traders) are accumulated inside the DC and, in the vast majority of cases, remain inside, without entering the real market where the asset itself is traded. If the majority of traders open positions in the same direction, then the DC usually simply withdraws the surplus resulting from a one-sided shift to its larger counterparty, i.e. hedges the cumulative position.
The broker, in turn, is an intermediary between the market where the asset is traded and the player (trader), displaying each, even the most minimal position of the player on the market. If most traders prefer to open in the same direction at the moment, then the broker does not need to do anything except the usual procedure for accepting and placing a trade order on the market - it is not affected in any way by the bias of the total position of traders in one direction or another.
Nevertheless, both the DC and the broker have their pros and cons, which for different traders can be of decisive importance. For further comparison, we take as brokers organizations that provide access to the Russian market - the Moscow Exchange, we will not consider brokers for Western markets.
Financial transactions and taxes
In this matter, DC is definitely more convenient than brokers. Firstly, DCs are not tax agents (except for those organizations that have received a license from the Central Bank of the Russian Federation and are officially represented in Russia) and do not charge you tax on the withdrawal of profits. The broker will definitely withhold personal income tax from you. Secondly, DCs offer a huge range of funds for depositing / withdrawing funds, often even with minimal fees or without them at all. To start trading with a broker, a trader is usually offered only two ways to replenish his account - bank transfer or depositing funds through the cashier and that’s all.
The quantity and quality of information for trade
What does a regular trader see when looking at the screen of the Metatrader trading terminal? Price chart, current quotes and open positions. With this, all information about the market is exhausted for him. A trader on the exchange, in turn, is available much more. In addition to the chart itself and the current price, the trader sees the so-called “glass” of orders, which shows him how many sellers and buyers at the moment and how much orders they place on the market. Also, the trader sees the real volumes of completed transactions, which may tell him, for example, the moment of the beginning of a strong price movement, when the volumes of the instrument begin to grow sharply. The developed software products compatible with QUICK allow you to display this information in a convenient graphical form, which greatly facilitates the trader's perception of information. It turns out that in this aspect brokers are more convenient than DCs, offering more important market information online.
Trading costs in the transaction
Here, brokers are ahead without any doubt. Usually, trading costs when trading futures on the Moscow Exchange (spread + broker's commission + trading fee of the exchange itself) fit into 2, sometimes 3 ticks of the price movement. In addition, on the exchange there is the possibility of opening a transaction without a spread (by placing a limit order), that is, it is quite possible to open and close a transaction without once having paid the spread. Compare with the spread and commission in the DC - the very minimum that I met was 9-10 ticks. When connecting a rebate service, this value can be reduced to 5-6 ticks, which is still 2-3 higher than on the exchange. For certain types of trading (scalping), this is the main advantage, sometimes allowing the loss-making strategy in the DC to be turned into a profitable one by the broker, simply because the transaction costs become much lower.