An introductory broker (IB) acts as an intermediary by comparing an entity seeking market access with a counterparty willing to take the other side of the transaction. In general, IBs issue recommendations as they delegate the task of executing trades to someone who works on a commercial surface. The introductory broker and the one who makes a transaction allocates fees and commissions after certain agreed agreements. Most BIs do not have the financial resources to directly execute trades for their clients, as this requires a direct relationship with futures exchanges and high surpluses for managing accounts, trades and reporting, as well as for the development and maintenance of trading platforms. The introduction of brokers helps to increase efficiency and reduce the workload of Commission futures traders. The layout allows for a specialization in which IB focuses on the customer, while the FCM focuses on the trade of ground operations. FCM provides trading platforms where customers have the opportunity to place trades online and are responsible for managing their accounts. However, the majority of FCMs would find it financially impossible to open offices across the country to serve their clients. Here, IBs stand out because they generally operate from smaller offices throughout the country. IBs allow FCM to operate on a local basis while using FCM`s trade infrastructure. An importing broker (IB) is a futures broker who has a direct relationship with a client, but delegates ground-based and executing work to another futures trader, usually a futures commission trader (FCM).
As a general rule, IB is linked to the FCM, either as an independent entity working with that trading company or as a direct subsidiary of that FCM. An IB is required to submit for its constituents and related persons: Many BIs are one person`s operations, while others are larger companies with multiple sites. IBs are better able to serve their customers because they are local, and their main goal is customer service. Outsourcing customer prospecting and maintenance to BIs creates economies of scale for FCMs and the futures industry. A registration fee for prinzipale and APs is not required if the person is currently registered in any capacity with the CFTC or if it is on the principle of a current CFTC filer. If the person files an application both as an ap and as an adjudicating entity, only a registration fee is required. One principle must be an AP. A principle of an IB forex should be an AP forex. A principle of a swap-IB must be a swap-AP.
The introduction of brokers plays the same role in futures markets as stockbrokers on stock markets. However, they are regulated by different authorities. Brokers are registered with the Securities and Exchange Commission (SEC) and are regulated by the Financial Industry Regulatory Authority (FINRA). Futures brokers are registered with the Commodity Futures Trading Commission (CFTC) and regulated by the National Futures Association (NFA).