⭐ Can Brokers with No-Dealing Desk be your Principal Counterparty?

Yes they can. It is called Hybrid Market Making (A-book + B-book).

The A-book side of the Hybrid Market Making is a No-Dealing Desk.
A Hybrid Market Maker acts as a Principal and a Counterparty to your trades per both: legal definition and a license they hold.

What is Hybrid Market Making using STP technology?

Hybrid Market Making is a carefully balanced A-book (NDD) + B-book (DD) dealing strategy.
To pull this off, a Hybrid Market Market will utilize Straight-Through-Processing (STP) technology to aggregate and compare prices and decide on risk management. Hence Traders will see familiar marketing claims of "No-Dealing Desk and STP techology".

How Does it Work?

Hybrid MM Dealing and STP technology works as follows:
When execution is claimed to be NDD (No-Dealing Desk), this means that orders are executed automatically without human intervention. The Straight-Through-Processing (STP) part of the actual technology ensures that:
A. Prices are aggregated from multiple liquidity providers
B. The system automatically decides whether to hold the risk (match internally = B-book), or hedge it externally based on the current net risk exposure. This is also known as "STP Hedging".

How STP Hedging Works for a Hybrid MM?

1. The system tries Internal matching: first trying to match your "Buy" order with another client's "Sell" order internally.
2. STP Hedging: If a Forex Broker cannot match the order internally or if the net risk becomes too high, the Broker uses STP method to hedge that exposure with external liquidity providers.
3. Alternatively, for same group entities under different jurisdictions: a Forex Broker can explicitly operate under a NDD model, where they will hedge 100% of their client orders with their Own group company, which then will manages the risks. It looks like 100% NDD on paper and in action, yet the risk is still passed internally first, until the final risk management takes place.

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