Also known as a non-deal desk, the no dealing desk is a strategy that makes it possible for investors to access the interbank market immediately without the need to go through the usual dealing desk. There are potential benefits to this approach as well as some risks that should be taken into consideration. The process is most commonly associated with trading on the foreign exchange or Forex market, and in some cases may allow the investor to generate returns on short-term opportunities in the rate of exchange between two currencies that could be gone if the deal were managed through a dealing desk.
The main benefit of a no dealing desk situation is the ability to bypass the dealing desk and initiate trades directly in the market. Dealing desks are services provided by many different types of financial institutions that offer investment support and assistance to investors. In some instances, this means that the broker who is arranging the deal for the client is also the individual who is managing the corresponding transaction with the other party. By contrast, a no dealing desk situation requires working with a broker who is focused specifically on the needs and goals of his or her client, and not a third party.
A potential drawback with a no dealing desk approach is that the investor is effectively working with a wider range of providers in the marketplace in order to find the best deal. While this greater variety can often result in finding a better deal, it also can mean having to explore the marketplace in real time, possibly missing an opportunity while evaluating the benefits of a different one. In reality, this risk is somewhat small thanks to the use of technology that makes it possible to search and offset transactions within very short periods of time. Depending on how the systems used by the broker are set to function, the offsetting process can seem to occur almost automatically.
When evaluating brokers to use for the management of investment transactions, it is often a good idea to determine if a given broker is of the no dealing desk variety or focuses more on dealing desk transactions. Depending on the investment philosophies of the investor, one approach or the other may be better suited to achieving certain goals. Since both methods have advantages and disadvantages, taking the time to match how a broker works with the goals of the investor will go a long way toward the creation of a long and mutually beneficial working relationship.