Every time a client opens a trade, a broker has to decide what happens to the other side of it. Either the trade is passed to the market through a liquidity provider, or the broker takes the other side itself. That one decision is the difference between an A-book and a B-book broker, and it shapes your revenue, your risk and the technology you need.
A-book: passing trades to the market
An A-book broker routes each client order to an external liquidity provider, usually through a bridge. The broker is an intermediary. It earns a markup on the spread, a commission per lot, or both, and it does not care whether the client wins or loses.
- Revenue: spread markup and commission on volume. Steady, but thin per trade.
- Risk: low market risk, but you depend on volume, and you need a margin deposit with your liquidity provider, often quoted at $50,000 or more.
- Technology: a trading platform, a bridge and a liquidity relationship, each with its own costs.
- Other names: STP (straight through processing), ECN or no dealing desk, although these terms are used loosely in marketing.
B-book: taking the other side
A B-book broker keeps trades in house and becomes the counterparty. If a client buys one lot of EUR/USD, the broker is effectively short that lot. When the client loses, the broker keeps the loss. When the client wins, the broker pays.
- Revenue: spreads and commissions on every trade, plus the net trading losses of clients.
- Risk: you carry market risk. A consistently profitable client, or many clients right on the same big move, is paid from your money.
- Technology: no bridge or liquidity account needed, but you need sound risk controls: leverage limits, margin calls, stop out and the ability to act on exposure.
- Other names: market maker or dealing desk.
B-booking is legal and common, but in many regulated markets it brings conflict of interest rules, disclosure duties and capital requirements. Whatever your jurisdiction, your client agreement should say plainly how orders are executed.
Hybrid: what most retail brokers actually do
In practice most retail brokers run a hybrid. Smaller and less experienced accounts stay on the B-book, while large or consistently profitable accounts are routed to the A-book so the broker is not exposed to them. Industry explainers from Devexperts, TradeLocker and others describe hybrid as the norm for retail forex and CFD brokers.
A hybrid needs both sets of infrastructure: a liquidity provider and bridge for the A-book side, and risk tooling to decide who goes where. That is why many new brokers start with one model and add the other once they have volume.
A-book vs B-book side by side
| A-book | B-book | |
|---|---|---|
| Who takes the other side | A liquidity provider | You, the broker |
| Main revenue | Spread markup and commission | Spreads, commission and client net losses |
| Market risk | Low | You carry it |
| Extra set-up | Bridge, liquidity account, margin deposit | Risk controls and a cash reserve |
| Conflict of interest | Low | Must be managed and disclosed |
| Typical for | Larger and regulated brokers | Many small and offshore brokers |
"If trades stay in house, how do I earn?"
This is one of the questions prospects ask us most often, so here is the direct answer. On a B-book, client deposits are real money in your accounts and trades run against live market prices, but the trade itself is not sent to an external market. You earn the spread you set above the raw price, any commission you charge per lot, and the net result of client trading. Your spreads and leverage settings are your pricing.
The other side of that is risk. If your clients are profitable overall in a month, you pay them from your own funds. A B-book broker therefore needs a cash reserve separate from operating money, sensible leverage, and rules for when to cut exposure or route a client elsewhere.
Which model should a new brokerage start with?
- Start A-book if you have the capital for a liquidity margin deposit, you want low market risk, and you expect enough volume for commissions to cover your costs.
- Start B-book if you are starting lean, you understand the risk, you hold a reserve, and your legal structure and client terms allow it.
- Plan for hybrid if you expect to grow, because profitable clients will eventually need to be hedged.
Whichever you choose, take advice on how your jurisdiction treats it before launch. Our guide to offshore and regulated licences covers how capital requirements differ.
Where FirmForge fits
Whichever model you choose, the day-to-day risk controls live in the platform. On FirmForge you set spreads, leverage and contract sizes per asset class, create account tiers with their own leverage, and use margin call alerts, force close, admin close-all and a price spike guard from the back office.
FirmForge does not include a liquidity provider or a bridge; if you want those, you arrange them separately. Brokers on the Enterprise plan can bring their own DXtrade, cTrader or Match-Trader.
Frequently asked questions
What is the difference between A-book and B-book?
An A-book broker passes client trades to a liquidity provider and earns spread markup or commission. A B-book broker keeps trades in house, takes the other side and earns spreads, commission and client net losses, while carrying the risk of client profits.
Is B-book trading legal?
Yes, market making is legal in most jurisdictions, but regulated markets often add conflict of interest rules, disclosure duties and capital requirements. Your client agreement should describe your execution model.
How do B-book brokers make money?
From the spread they set, commission per lot, swaps where charged, and the net trading losses of clients. When clients are profitable overall, the broker pays them from its own funds.
What is a hybrid broker model?
A hybrid broker keeps some client flow in house and routes the rest, usually large or consistently profitable accounts, to liquidity providers. Most retail forex and CFD brokers work this way.
Which model is best for a new brokerage?
A B-book needs less set-up capital but carries market risk and needs a reserve. An A-book needs a liquidity account and bridge but carries less market risk. Many brokers start with one and move to hybrid as volume grows.