What the A-Book is
In the A-Book model the broker does not take the other side of the client's trade. Every order is passed to a liquidity provider, such as a bank, a prime broker or an aggregator, which executes it. That is why the A-Book is also called the STP (straight through processing) model or, when the client reaches an order book with several participants, the ECN model.
The broker earns what it adds on top of the provider's price: a spread markup, a commission per lot or both. Its income depends on how much its clients trade, not on whether they win or lose.
What it means for the broker:
- It carries no market risk on its clients' positions, because they are covered at the provider.
- It pays liquidity and connectivity costs with one or more providers.
- It earns less per trade, but its interests are aligned with the client's: it wants the client to trade more, which is more likely when the client does well.
What the B-Book is
In the B-Book the broker is the counterparty. The client's order never reaches the market: it is offset inside the broker, which takes the opposite position. This is the market maker model.
The broker's result mirrors its clients'. If the client loses, the broker keeps that loss; if the client wins, the broker pays the profit. On top of that it charges the spread on every trade, just like in the A-Book.
What it means for the broker:
- It pays no external execution per order, so the margin per trade is higher.
- It carries real market risk: a winning streak by large clients or a news event that moves the price can cause significant losses.
- It has a conflict of interest with its client, which regulators usually require it to manage and disclose in its order execution policy.
An example with numbers
Say a client buys 1 standard lot of EUR/USD and the broker adds a 0.5 pip markup on top of the provider's spread. On a standard EUR/USD lot, each pip is worth 10 dollars.
In the A-Book, the broker earns 5 dollars on that trade whatever the price does. If the client closes 40 pips in profit, the liquidity provider pays that profit and the broker keeps its 5 dollars.
In the B-Book, the broker charges the spread and also sits on the other side. If the client closes 40 pips in loss, the broker adds 400 dollars; if the client makes 40 pips, the broker pays 400 dollars. Multiplied by hundreds of clients and thousands of trades, that difference is why risk management sits at the center of any B-Book.
The hybrid model
Few brokers run a pure model. The usual setup is hybrid: the broker decides, client by client or even order by order, which flow stays in the B-Book and which goes to the A-Book.
The most common routing criteria:
- Client profile: traders with consistent profits or very short-term strategies are usually sent to the A-Book.
- Position size: above a certain volume, the order is covered at the provider.
- Net exposure per instrument: when the open positions on a symbol add up past a limit, the broker hedges the excess.
- Market events: ahead of a high-impact release, less flow is kept internally.
What makes a hybrid work is that those rules apply in real time and are logged, so you can explain afterwards why each order went where it did.
How to choose the model for your brokerage
A new broker with little capital and no risk team usually starts on the A-Book: it earns less per trade but has no exposure to watch. As volume grows and it gathers data on how its clients trade, the hybrid lets it internalize the lower-risk flow and hedge the rest.
Before deciding, check three things:
- Which execution models your license allows and what the regulator requires for each.
- How much capital you can commit to absorb the losses the B-Book may produce.
- Whether you have tools to measure exposure in real time. Without them, keeping positions internally is trading blind.
How Pipsend handles it
Pipsend's Legend plan includes a risk management system with A/B books. It runs inside the same ecosystem as the platform, multi-provider liquidity management, the CRM and the backoffice, so each client's accounts, trades and history sit in the same place you manage risk from.
The Spectator and Warrior plans do not include the A/B book risk system. You can see what each plan includes on pricing or, if your operation already runs on MetaTrader 5, compare options in Pipsend vs MetaTrader 5. The full brokerage infrastructure is on the solution for brokers.
Frequently asked questions
It is the model where the broker sends each client order to a liquidity provider instead of keeping the opposite position. The broker earns a spread markup or a commission per lot and carries no market risk on those trades, because they are covered at the provider. It is also known as the STP model or, when there is access to an order book with several participants, ECN.
The B-Book is the model where the broker is its client's counterparty: the order never reaches the market and the broker takes the opposite position, like a market maker. It is legal in many jurisdictions as long as the broker's license allows it, but it creates a conflict of interest that regulators usually require brokers to manage and disclose. The exact requirements depend on each country's regulator.
Many retail brokers use a hybrid model. They keep the lower-risk flow in the B-Book and send consistently profitable clients, large positions or exposure above their per-instrument limits to the A-Book. The hybrid combines the B-Book margin with the protection of the A-Book, as long as the routing rules apply in real time and are logged. Brokers that are just starting usually begin on the A-Book and move to a hybrid as volume grows.
It is the sum of all clients' open positions on the same instrument that the broker keeps internally. If many clients buy EUR/USD and the broker does not hedge them, it is short EUR/USD by that amount, and a price rise causes it losses. Measuring it in real time, symbol by symbol, is what lets the broker decide when to hedge the excess at a liquidity provider.
Yes, on the Legend plan, which costs USD 8,000 per month plus a one-time USD 2,000 setup and includes up to 10,000 live accounts. That plan adds the A/B book risk management system, CopyTrading, AI tournaments and the Strategy Creator, with a 99.99% uptime SLA. The Spectator and Warrior plans do not include the A/B book risk system. The full plan comparison is on the pricing page.