What is A-book and B-book
A-book means a broker passes a client's order to an outside liquidity provider or market. B-book means the broker keeps the order in-house and acts as the other side of the trade itself. A broker that does the second is usually called a market maker broker.
A precise way to put it: the "book" is the broker's record of client positions. In an A-book, the broker hedges each client position with an external counterparty, so its own market exposure stays close to zero. In a B-book, the broker internalises the position and carries the market risk as principal, like a dealer.
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A worked example (hypothetical)
A client buys a EUR/USD CFD (a derivative that tracks the price without delivering the currency).
| A-book | B-book | |
|---|---|---|
| What the broker does | Opens a matching buy with a liquidity provider | Records the trade and holds the opposite (sell) position itself |
| Broker's income | Spread markup and/or commission | Spread, plus the client's loss if the price moves against the client |
| If EUR/USD rises | The client's profit is covered by the hedge | The broker pays the client's profit from its own funds |
| If EUR/USD falls | The client loses; the broker's hedge loses the same amount | The client's loss becomes the broker's gain |
In both cases the client's result on the trade is the same. What changes is who holds the risk on the other side.
A-book vs B-book: edge cases
- Hybrid model. Most retail brokers mix both. They may internalise small or short-term flow and hedge large or consistently profitable accounts.
- Netting. When some clients buy and others sell the same instrument, the opposing positions offset each other. The broker may hedge only the net remainder.
- Labels. "STP" and "ECN" describe how orders are routed. They do not prove that every trade is A-booked.
- Conflict of interest. B-booking is not illegal in itself, but the broker profits when clients lose. That is why rules on price feeds, slippage and execution quality matter. A-booking reduces this conflict without removing it. Practices such as front running are a separate abuse.
Where the terms appear
- Client agreements and order execution policies. Look for wording such as "we act as principal" or "we are your counterparty". This means the broker can B-book.
- Platforms. MetaTrader shows execution types and fills. These do not show which book a trade went into.
- Reports and news. Listed brokers report "market making" or "net trading revenue". News items on regulator fines often cover how internalised flow was priced.
The Pakistan context
The Securities and Exchange Commission of Pakistan (SECP), with trading in listed securities and commodities only via SECP-licensed securities and futures brokers. Separately, per the SECP, offshore forex/CFD platforms operate without regulatory approval in Pakistan, and per the SECP, offshore platforms have no Pakistani licence or oversight and offer no legal protection or recourse. Whichever book a trade goes into, leveraged CFD and forex trading can lose money fast. See Regulation and Safety and Risk management.
Related terms
Counterparty · Dealer · Exposure · Derivatives · Fill and partial fill · Broker compliance · Trading glossary
Frequent questions
Is a B-book broker a scam?
No. Market making is a normal business model. The risk comes from how prices and fills are handled, so read the execution and conflict-of-interest policies.
Can I tell which book my trade is in?
Usually not. Brokers rarely disclose routing for individual trades. The client agreement tells you only whether the broker may act as principal.
Is A-book always better for the client?
Not automatically. Spreads, commissions, slippage and the quality of execution matter more to your results than the label.
What does "market maker broker" mean?
It is a broker that quotes its own buy and sell prices and takes the other side of client trades. In other words, it B-books at least part of its flow.