Get Introducing Broker Agreement

An introducing broker, meanwhile, introduces their clients to a clearing broker. In this case, the introducing broker will send their clients' cash and securities to a clearing broker to clear the trade, and the clearing broker will also maintain the customers' accounts.

An example of this is a comparison website that lists various brokers on its site. If the client follows the link of the comparison site, opens a trading account, funds it and trades on it – the comparison website might earn a commission from this without knowing the client or having any interaction with them.

An introducing broker (IB) is an individual or organization that solicits or accepts orders to buy or sell futures contracts, commodity options, retail off-exchange forex contracts, or swaps but does not accept money or other assets from customers to support these orders.

A Type 4 introducing/carrying broker arrangement is one of four introducing/carrying broker arrangements where an introducing broker is allowed to introduce clients to a carrying broker.

Introducing Broker vs Clearing Broker vs Executing Broker An introducing broker introduces the client to a clearing broker. The clearing broker handles the trade and manages the account. In contrast, an executing broker processes buy orders and sell orders. An IB delegates the work to different brokers.

(c) The term "Introducing Broker-Dealer" or "Introducing Broker" shall mean the member firm that has been identified in the System as a party to the transaction, but does not execute or clear trades.

An introducing broker (IB) acts as a middleman by matching an entity seeking access to markets with a counterparty willing to take the other side of the transaction. Generally speaking, IBs make recommendations while delegating the task of executing trades to someone who operates on a trading floor.