AKA, price shading. Price markup is effectively price shading. Why is that the case? Well, if FXCM Prop receives an interbank quote and then adds a pip to both ends, they would have to do so on a delayed basis. First receive the quote, then mark it up. There's your delay. Sure, it's not the same as delaying quotes 5 seconds as some of the worse bucketshops do, even their retail division is suspected of doing. But if they perform their markup 1 sec or so behind the interbank, then that's enough time for them to profit or at least attempt to profit off the delayed spread. That's shading. It's either direct access or it's not. Anything that is not is shading. (Note: banks shade their prices to from time to time.)
But that doesn't sound like that is what they do. Here's why.
Say interbank BBO for EUR/USD is 1.2600/26015. To mark that up, FXCM Prop would have to quote you 1.2601/1.26025. Last time I checked against a Reuters terminal, this wasn't the case. They seemed to move in lock-step. Could that have changed in a year? Sure. Point is, I know that they receive kickbacks(AKA rebates) from the banks they use. Don't take my word for it, call them up and ask them. They don't seem to have any problem admitting it. In fact, they think of it as a selling point.
