Ask ten founders how brokers make money and you'll get ten versions of 'the spread.' The truth is your execution model — A-book, B-book or hybrid — determines your margin profile, your risk exposure and half of your technology bill. Here's the plain-language version.
·A-book: you're a router
In a pure A-book, every client order is hedged with your liquidity provider. You earn markup and commission; the LP takes the market risk. Margins are thinner but predictable, and your incentives are aligned with clients — you want them trading for years. The catch: your profitability depends entirely on execution costs and volume, which is why A-book brokers obsess over LP terms.
·B-book: you're the counterparty
In a B-book, you internalize trades — the client's loss is your gain, and vice versa. Since most retail flow loses over time, margins are much higher. The risk is the tail: one client on a winning streak with size, or one volatile news event with an exposed book, can erase a quarter's profit in an afternoon. B-book without real-time risk tooling isn't a model, it's a bet.
·Hybrid: what most profitable brokers actually run
The hybrid model routes flow dynamically: predictable retail flow stays internalized, while winning, toxic or oversized flow gets hedged to the LP.
- Profitable clients and large tickets → A-book, so their wins are the LP's problem
- Small, mixed-quality retail flow → B-book, capturing the margin
- Risk engine watches exposure per symbol and flips routing when limits are hit
·What the model demands from your stack
Your choice cascades into everything: the bridge or gateway must support per-group routing rules, your dealing desk needs exposure dashboards, your LP agreement needs terms that make hedging economical, and your regulatory story must match reality. This is why we design the execution model, the LP agreement and the platform setup together rather than as separate purchases.
·Choosing for your launch
New brokers with a community or IB book usually start hybrid with conservative B-book limits; institutional-facing brokers go A-book with multi-LP aggregation. If you're deciding now, message us on WhatsApp with your expected flow profile — we'll map the model, the risk rules and the exact stack it needs.