A-Book / B-Book Model

In the A-Book model, a broker passes client orders through to the real market (an external liquidity provider), earning revenue from spread markup or commission regardless of whether the client wins or loses. In the B-Book model, the broker takes the other side of the trade internally, meaning the broker profits directly when the client loses — a structural conflict of interest that's disclosed and regulated but not banned outright. Many brokers run a hybrid model, routing larger or more consistently profitable clients A-Book while B-Booking smaller or less experienced accounts, a practice some regulators require to be disclosed.