How does a non-dealing desk Forex broker work?

There are two general types of retail Forex brokers:

Dealing Desk Brokers, also called Market Makers, provide liquidity to the market by offering both buy and sell quotes (Bid and Ask) and taking the other side of the trade. That is the reason they are also called Market Makers. Dealing desk brokers do not charge commissions for trading. They add commissions to the spread in the form of extra pips added to the interbank quote (see also What Is A Spread? and What Is A Pip?).

No Dealing Desk Brokers. There are two types of No Dealing Desk brokers:
– Straight Through Processors (STP) – brokers who connect traders with the interbank market. They collect quotes from multiple sources and present the trader with the best bid and ask prices adding some pips as their commission.
– Electronic Communications Networks (ECN) – brokers that allow direct trading between all participants of their network. They do not alter the spreads and charge small commissions for each trade. The true ECN model eliminates conflict of interest that exists when brokers take the opposite side of the trade.