Introducing broker

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An Introducing Broker (IB)[1] is an individual or organization that solicits or accepts orders to buy or sell futures contracts or commodity options but does not accept money or other assets from customers to support such orders. Client funds for trading must be placed in an account directly with a futures commission merchant (FCM).

An introducing broker (IB) must be a member of NFA. There are two types of IBs. A guaranteed introducing broker is guaranteed by an FCM and may only have customer accounts with one FCM. An Independent IB may have clearing relationships with multiple FCMs, but must meet certain minimum financial requirements.

U.S. Registration

Individuals or organizations are required to register with the National Futures Association (NFA) unless they are already registered as an Associated Person, registered as an Futures Commission Merchant, registered as a Commodity Pool Operator and only operated pools, registered as a Commodity Trading Advisor and either solely manages accounts under powers of attorney or does not receive per-trade compensation. Additionally, registration is not required if the individual or organization is a non-U.S. resident or firm with only non-U.S. customers and their firm submits all trades to a futures commission merchant (FCM) for clearing.

IB Organizations

The National Introducing Brokers Association is a nationally recognized organization representing professionals in the futures and options industry. Members include introducing brokers, commodity trading advisors (CTA), futures and options exchanges and FCMs. The NIBA was established in 1991.[2]

Resources

References

  1. Introducing Broker. National Futures Association, IB Registration.
  2. Our Association. NIBA.