Introducing Broker Dealer

Introducing Broker Dealer, or just called an Introducing Broker, usually IB, is one who guides customers and transactions to a clearing broker but not hold customer funds or securities. This is facts you must know about introducing broker dealer

The functions of an Introducing Broker may include: attracting new clients to an asset management company; conducting specialized seminars and lectures; advising clients on the use of software; and providing clients with the necessary technical and training support.

Many traders regard the introducing broker as a “middleman,” and they would prefer to work directly with the clearing broker. but at least there is there benefits if you using introducing broker, that is:

1. Support of your IB can assist you in case you run into a problem with the clearing firm;

2. value added services

3. the volume-based trade rebates many IBs offer.

In the 1990s there was a good deal of litigation over the role of Introducing Broker, especially as it related to the arbitration clauses into which the clearing broker and the customer conventionally enter. In that dispute, the Introducing Broker and its employees argued, after customers had filed suit against them for securities fraud, then a conclusion is only required for proceed to arbitration rather than court.

CFTC Rules
The U.S. Commodity Futures Trading Commission’s rules require IBs in the futures markets to register as such, unless they qualify for quite narrow exceptions.

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