An introducing broker.

T

tradecrumbs

What exactly is an introducing broker? Lots of brokers say they are "intoroducing brokers" but when I ask them what an "introducing broker" is, then won't tell me. They say a confusing definition and get all defensive with something like "i own my own business" and I don't work for somebody else. When I look up the the definition of "introducing broker" in the dictionary, it says something totally different than what they told me it iwas.
What is the different between an introducing broker and a regular broker?
 
crumbs - an IB in futures is basically the firm that markets and tries to get new customers. Now they (usually) are not the ones placing your trades on the exchanges - an FCM does that. Some FCM's do not like/want to market to the retail trader, so they partner up with an IB that does all the marketing and customer service stuff and the FCM simply places the trades and provides statements. They are usually 2 separate co's and some IB's have multiple FCM's that they use.

Hope that helps.
 
Should it be on the introducing brokers website(is it the law) which FCM(futures commission merchant) they are routing our orders to?

I'm asking because some of these brokers seem very secretive and defensive when we ask questions like these. One broker over the telephone even refused to tell me his last name.
 
There are two types of IB's, there are IIB - Independent Introducing brokers, like Global Futures. We can work with multiple firms and refer clients to which ever firm will suit them best. There are also GIB which is Guaranteed Introducing Brokers, who are basically slaves to one brokerage. The difference is who is putting up the risk money for debits.

With regards to knowing which FCM your dealing with for routing your orders, that is pretty simple. Just look at your statment, they usually come from the FCM. At least in my experience.

Although the rules change if the FCM is a non clearing FCM and whether they are a fully disclosed omni bus account or non disclosed omni bus account.
 
Quote from tradecrumbs:

Should it be on the introducing brokers website(is it the law) which FCM(futures commission merchant) they are routing our orders to?

I'm asking because some of these brokers seem very secretive and defensive when we ask questions like these. One broker over the telephone even refused to tell me his last name.
More...

crumb - if they won't tell you which FCM they plan to use for you, I would just hang up the phone and move on. There are plenty of brokers that will tell you this info.
 
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