A-Book vs B-Book: How Your Broker Actually Handles Your Order
Macro Glossary, Broker and Prop
By Ken Chigbo, macro trader and founder of KenMacro, 18+ years in markets.
Updated 2026-05-20
The desk’s answer
An A-book broker passes client orders to external liquidity providers (banks, prime brokers) for execution and earns from spread markup or commission. The broker takes no market risk; the client’s gain or loss is matched against the LP’s book, not the broker’s. A B-book broker internalises orders, taking the other side itself. When the client loses, the broker keeps the loss as revenue. Most retail brokers run a hybrid, routing larger or net-profitable accounts to A-book and smaller or net-losing retail accounts to B-book, based on internal classification rules.
Defined term, A-book vs B-book broker model
An A-book broker passes client orders directly to external liquidity providers and earns from spread markup or commission, taking no market risk on the trade itself. A B-book broker internalises client orders, taking the other side and profiting when the client loses. Most retail brokers run a hybrid model, routing larger or more profitable accounts to A-book and smaller or net-losing accounts to B-book.
How A-book execution works
When a client opens a position, the A-book broker simultaneously opens an offsetting position with one of its liquidity providers (a Tier-1 bank or prime broker). The broker is hedged: if the client wins, the broker collects from the LP; if the client loses, the broker pays the LP. The broker’s only earnings on the trade are the spread markup and any commission. There is no conflict of interest because the broker does not profit from client losses. Genuine ECN and STP execution is by definition A-book. The model is structurally clean but produces lower per-client revenue than B-book, which is why purely A-book retail brokers are rare.
How B-book execution works
When a client opens a position, the B-book broker takes the other side internally. The broker is now exposed to the market move: if the client wins, the broker pays the client’s profit; if the client loses, the broker keeps the loss. The economic logic is that across thousands of small retail accounts, the net outcome of B-booking is profitable because the average retail account loses money over time (FCA disclosure rules show 70 to 85 percent of retail CFD accounts lose money). The broker’s revenue includes the spread plus the net loss across the B-booked client base. The conflict of interest is structural: the broker profits when the client loses.
Hybrid models and what to verify
Almost every retail broker runs a hybrid: profitable, high-volume or larger accounts are A-booked (hedged externally) because the broker prefers the spread revenue to the market risk; small or net-losing accounts are B-booked (internalised) because the broker prefers the loss revenue. The classification is internal and not disclosed to clients. Two reads. First, regulator quality matters: FCA, ASIC and CySEC require best-execution policies that constrain abusive B-book behaviour, while offshore regulators do not. Second, behaviour around news and consistent winning: a B-book client who is winning consistently is often re-classified to A-book, sometimes with execution friction (requotes, slippage) signalling the change. Persistent friction after profitable runs is a B-book tell.
Frequently asked
What is the difference between A-book and B-book?
An A-book broker passes client orders to external liquidity providers and earns from spread markup or commission, with no market risk. A B-book broker takes the other side of client orders internally, profiting when the client loses. Most retail brokers run a hybrid of both.
Is B-book always bad?
Not necessarily. B-book is the standard for small retail accounts because the per-account revenue is too low for external hedging to be economical. Properly regulated B-book brokers (FCA, ASIC) operate under best-execution rules. The concern is unregulated offshore B-book brokers where there is no enforcement of execution quality.
How can I tell if my broker is B-booking my account?
Persistent slippage, requotes, and execution friction after consistent winning are tells. A B-book broker may also widen spreads around news for B-booked accounts specifically. The most reliable check is regulatory tier: FCA, ASIC and CySEC enforce best execution; offshore regulators do not. Most well-regulated brokers will A-book a consistently profitable account.
What this means at the desk
Hybrid is the retail norm. Regulator quality is the real protection, not the model label.
Read next from the desk
Educational glossary entry only,
From the desk
Knowing the term is step one. The next question is always which broker actually serves you well. The desk audits eight brokers on regulation by entity, true cost, and honest fit, with the regulatory caveats the comparison sites bury.
not financial advice and not a trade signal. The desk teaches a reading framework, never entries, targets or recommendations. Trading forex, indices and leveraged products carries significant risk and may not be suitable for all traders. Some broker links on this site are commercial partnerships and KenMacro may receive compensation, which does not change the editorial view. Only trade with capital you can afford to lose.
From the desk, free
Get the macro framework the desk actually trades
The same regime-first framework behind every call on this site, plus the weekly macro brief. Free. No spam, unsubscribe anytime.
Continue reading