Introducing Brokers

An introducing broker (IB) is an individual or firm that has established a relationship with one or more brokerage firms. Similar to an FCM, an IB is responsible for maintaining customer relationships and servicing customer accounts, and its sales force receives commissions. However, an IB cannot accept funds from its customers, and, as a result, all customers of IBs must open and maintain accounts with an FCM.

There are two types of introducing brokerage firms--independent and guaranteed. IBs that have sufficient capital to meet regulatory requirements may choose to introduce their clients through a number of different FCMs. Such IBs are known as independent or non-guaranteed IBs. A guaranteed IB has a legal and regulatory relationship with the guarantor FCM through which the IB introduces its customers.