Basically, an introducing broker is an individual who operates on customers’ behalf while accepting or soliciting purchase or sell orders. The IB can act individually or as an organization. Besides, it can be affiliated with Future Commission Merchant (FCM) or act independently.
Online trading brings a broader introducing broker definition. Today, it can also be a broker partner or affiliate as well as a signal provider (copy master) in the copy trading ecosystem.
So, what is introducing a broker? What are its types and functionalities? Let us find the answers in this article.
Introducing Broker Definition
Initially, an introducing broker is an intermediary between a client who wants to sell different assets and the financial market. IBs can either act as recommendation providers or execute trades directly on the customers’ behalf. Generally, the term mainly referred to land-based service providers. However, with the evolution of technologies and brokerage platforms. Online IBs are becoming increasingly popular.
The main features to consider:
- An introducing broker acts as an individual or organisation to delegate trade execution or perform it to him or herself.
- An introducing broker can operate as the FCM affiliate or independently. He or she can establish a partnership with a land-based firm or online trading platform.
- The main mission is to provide high-level customer services rather than trade in their own interest. This fact makes introducing brokers more client-oriented.