What is an introducing broker-dealer?

An introducing broker-dealer uses the services of another broker-dealer, referred to as a clearing broker-dealer, to clear and settle customer transactions. Introducing firms may also use the services of a clearing broker-dealer to clear and settle proprietary transactions.

What is an introduction broker?

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.

What is the meaning of broker-dealer?

Key Takeaways. A broker-dealer is a financial entity that is engaged with trading securities on behalf of clients, but which may also trade for itself. A broker-dealer is acting as a broker or agent when it executes orders on behalf of its clients, and as a dealer or principal when it trades for its own account.

Is an introducing broker a broker-dealer?

An Introducing broker, is a broker dealer who introduces customer accounts to a clearing broker dealer. The introducing broker dealer does not hold (provide safekeeping for) customer assets or settle trades with counterparties.

What is an introducing broker in forex?

An Introducing Broker (IB) is basically an agent which introduces new customers to a Forex brokerage and in return for sending new customers to a brokerage, the Introducing Broker receives a fee in return.

What is an introducing firm?

The broker-dealer for whom the clearing broker performs these services is called an “introducing broker” or “introducing firm” because it “introduces” the accounts of its own customers to its clearing broker to execute, clear, settle, and otherwise process their trades.

What is a broker-dealer example?

What Are Examples of Brokers-Dealers? Some of the most well-known broker-dealers are Charles-Schwab, E-Trade, and TD Ameritrade. Some of these, like Charles-Schwab, are full-scale financial services firms, while E-Trade and TD Ameritrade are primarily online brokerage firms.

What is a broker-dealer agreement?

Broker-Dealer Agreement means an agreement between the Auction Agent and a Broker-Dealer, pursuant to which such Broker-Dealer agrees to follow the Auction Procedures.

What is the role of a broker?

A broker is an individual or firm that acts as an intermediary between an investor and a securities exchange. A broker can also refer to the role of a firm when it acts as an agent for a customer and charges the customer a commission for its services.

Who regulates broker-dealers?

FINRA
FINRA Regulates Broker-Dealers, Capital Acquisition Brokers, and Funding Portals. A Broker Dealer is in the business of buying or selling securities on behalf of its customers or its own account or both. A Capital Acquisition Broker is a Broker Dealer subject to a narrower rule book.

What is an introducing broker?

An introducing broker (IB) is a broker in the futures markets who has a direct relationship with a client, but delegates the work of the floor operation and trade execution to another futures merchant, typically a futures commission merchant (FCM).

What is the difference between a broker and a dealer?

When executing trade orders on behalf of a customer, the institution is said to be acting as a broker. When executing trades for its own account, the institution is said to be acting as a dealer.

What is broker-dealer?

Broker-dealer. When executing trades for its own account, the institution is said to be acting as a dealer. Securities bought from clients or other firms in the capacity of dealer may be sold to clients or other firms acting again in the capacity of dealer, or they may become a part of the firm’s holdings.

What is the difference between an introducing broker and a clearing firm?

The clearing firm, not the introducing broker, receives payments and securities from the clients and handles record-keeping. The introducing broker, who earns a commission on the transaction, typically pays a fee for each trade and interest on margin loans the clearing firms make to the clients it introduces.