Ask a technology vendor whether you should run an A-book or a B-book and you’ll usually get the answer that suits their platform. It’s one of the most consequential decisions you’ll make as a new broker — it shapes your revenue, your risk, your capital needs and your compliance burden — so it deserves a straight answer rather than a sales-led one.
Here’s the independent version: none of the three models is “best.” Each makes money differently and fails differently. The right choice depends on your capital, your risk appetite, your team’s experience and the clients you’re targeting. This guide explains how each works in plain terms, then gives you a way to decide.
What is an A-book broker?
An A-book broker (also called agency or STP — straight-through processing) passes client orders through to external liquidity providers. You’re the conduit between your client and the market, not the counterparty to their trade.
- How it earns: spread markup and/or commission on volume.
- Market risk: limited — you’re not holding the other side of client positions, so you don’t profit or lose from their outcomes.
- Operational demand: lower. No dealing desk to run, simpler risk profile.
- The trade-off: thinner margins per trade. You make money on flow and volume, not on client losses, so profitability depends on acquiring and retaining enough active clients.
A-book is the lower-risk, lower-ceiling path. It’s often the more comfortable starting point for founders without deep risk-management experience, and it tends to sit better with clients who care about execution transparency.
What is a B-book broker?
A B-book broker (a market maker) internalises client flow rather than passing it to the market. You become the counterparty: when a client loses, the position resolves in your favour, and when they win, it costs you.
- How it earns: primarily from client trading outcomes, plus spread.
- Market risk: significant. You’re carrying exposure to your clients’ aggregate positions.
- Operational demand: high. This model only works with mature risk controls — real-time exposure monitoring, margin and liquidation logic, client and group risk limits, audit trails, and disciplined dealing rules.
- The trade-off: higher revenue potential, but it can quickly cost more than it earns without the risk infrastructure and discipline to manage exposure.
B-book is the higher-revenue, higher-risk path. Done well, with proper controls, it can be the more profitable model. Done casually, it’s the fastest way to blow up a young brokerage.
What is a hybrid model?
A hybrid broker routes flow between A-book and B-book based on rules — by instrument, by client segment, by behaviour, or by risk profile. For example, profitable or high-volume clients might be passed through (A-book) while other flow is internalised (B-book).
- How it earns: a blend of both models.
- Market risk: managed and selective, rather than all-or-nothing.
- Operational demand: the highest of the three — you need the risk infrastructure of a B-book plus the routing logic and judgement to decide what goes where.
- The trade-off: the most flexibility and, potentially, the best risk-adjusted economics — but also the most demanding to run, and the easiest to get wrong if your routing rules aren’t sound.
Most established brokers end up hybrid. That doesn’t mean you should start there: hybrid rewards experience and infrastructure you may not have on day one.
Side by side
| A-book (agency/STP) | B-book (market maker) | Hybrid | |
|---|---|---|---|
| Counterparty to client? | No | Yes | Selectively |
| Main revenue source | Spread / commission | Client outcomes + spread | Both |
| Market risk | Limited | High | Managed |
| Operational complexity | Lower | High | Highest |
| Risk-control requirement | Modest | Substantial | Substantial |
| Revenue ceiling | Lower | Higher | Highest (if run well) |
| Best fit | Lower risk appetite, execution-focused clients, leaner teams | Experienced operators with real risk controls | Experienced operators wanting flexibility |
How to actually choose
Strip away the ideology — you’ll hear strong opinions in both directions — and the decision comes down to four honest questions.
1. What’s your risk appetite and capital position? B-book exposure needs a buffer. If a string of winning clients in a volatile week would threaten your solvency, you’re not ready to carry that risk yet.
2. Does your team have real risk-management experience? B-book and hybrid models live or die on dealing discipline and exposure control. If nobody on your team has run that before, A-book buys you time to build the capability.
3. Who are your clients, and what do they expect? Some client segments and jurisdictions place real weight on execution transparency. Your model choice interacts with the trust you’re trying to build.
4. What does your jurisdiction expect? Regulatory expectations around conflicts of interest, best execution and risk disclosure vary, and they bear on how — and whether — you can run a B-book. This is worth confirming as part of your licensing decision.
A reasonable, common path: start A-book to launch cleanly and learn your flow, then introduce B-book or hybrid routing later, once you have the data, the controls and the experience to manage exposure deliberately.
A note on the ethics, because it matters
The B-book model is sometimes framed as inherently predatory — “the broker profits when you lose.” That’s an oversimplification. A well-run B-book with proper risk management and fair execution is a legitimate, widely-used model. What matters is whether it’s run with discipline and disclosed honestly. The problems come from brokers running B-books they can’t control, or hiding the conflict from clients — not from the model itself.
Where this fits in your launch
Your model is decision one for a reason: it drives your license, your technology, your liquidity needs and your compliance obligations. Choose it before you shop for anything else.
If you’d like an outside, independent read on which model fits your capital, team and target market — with nobody trying to sell you a platform on the back of it — that’s what Broker Origin does.
This is part of our independent guide to launching a brokerage. See also: How to start a forex or multi-asset brokerage · What a forex license really costs · White label vs turnkey vs building your own.
Broker Origin provides commercial and strategic advisory. It is not a law firm and does not provide legal or regulated financial advice. Regulatory treatment of broker models varies by jurisdiction — confirm current requirements with the relevant regulator or a licensed professional.