Broker Registration For Introducing Broker

A forex introducing broker (“IB”) is a firm that provides any one of a number of different services to forex investors. Many times the IB will act as an introducing party to a forex dealer/FCM or perhaps the IB is licensing a forex trading system to investors who want to trade for themselves.

Forex introducing broker can either be “independent” or “guaranteed.” The following is an overview of the requirements for a forex IB to broker registration with the CFTC and become a member of the NFA.

Independent IBs are those firms which are independent of any particular forex dealer/FCM and who may introduce to any forex dealer/FCM. Because such IBs are not guaranteed by a particular forex dealer/FCM, such IBs must have a $45,000 net capital requirement which must be maintained at all times.

Guaranteed IBs are those firms which have, generally, an exclusive relationship with a particular forex dealer/FCM. The Guaranteed IB can only introduce clients to the guaranteeing forex dealer/FCM. Because such IBs are guaranteed by the forex dealer/FCM, such IBs do not have a net capital requirement.

IBs will usually have other documents or agreements, such as sales or licensing agreements, which may be with either the forex dealer/FCM or with the forex client. These Broker Registration will need to be drafted or reviewed by experienced counsel.

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