An Introducing Broker (IB) is an entity that solicits and accepts orders for futures or options contracts but does not accept money or other assets from customers. Instead, IBs direct their customers’ orders and funds to a Futures Commission Merchant (FCM) for execution and clearing. IBs act as sales agents, earning commissions for introducing clients to FCMs. They are also regulated by the Commodity Futures Trading Commission and the National Futures Association.
Context
The role of Introducing Brokers is becoming relevant in the digital asset space as more regulated derivatives products related to cryptocurrencies become available. IBs can assist clients in accessing these markets through established FCMs, bridging the gap between traditional brokerage services and novel digital assets. Regulatory clarity for IBs operating with digital asset derivatives is a developing area, influencing how retail and institutional investors gain exposure to these markets.
The NFA is pivoting from prescriptive disclosures to a principles-based conduct framework, dynamically expanding anti-fraud compliance to all CFTC-listed digital commodities.
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