A-book vs B-book vs hybrid, explained simply

A plain-language guide to the three broker execution models: how A-book, B-book and hybrid brokers handle client orders, make money and manage risk, with a side-by-side comparison table.

EVO PlatformsRisk & executionNovember 2, 20269 min read

If you are planning to launch or run a forex or CFD brokerage, one of the first questions you will face is A-book vs B-book. The answer shapes how you make money, how much market risk you carry, what technology you need and how you present your brokerage to clients.

This guide explains each broker execution model in plain language: what A-book and B-book actually mean, where STP, ECN and market maker fit, how a hybrid model routes orders between the two, and which approach tends to suit which type of brokerage. It is neutral and educational. There is no single right model, only the one that fits your capital, team and client base.

Key takeaways

A-book brokers pass trades to a liquidity provider and earn from spreads and commissions, with low market risk.
B-book brokers act as counterparty, earn from spreads plus client net losses, and carry real market risk and a conflict of interest that must be managed.
A hybrid model segments clients into groups and routes or hedges the riskiest flow, which is how many established brokers operate.
Whatever model you choose, disclose it honestly and run it with fair execution at real market prices.
Most new brokers start with a B-book model; what decides long-term success is the quality of their risk tools.

What is A-book?

In an A-book model, the broker passes client orders to an external liquidity provider (LP), such as a bank, a prime-of-prime or another larger broker. When a client buys 1 lot of EUR/USD, the broker opens a matching position with its LP. The broker is a middleman, not the counterparty.

Because the trade is offset externally, the broker does not care whether the client wins or loses. Its revenue comes from the trading activity itself.

How an A-book broker earns money

Spread markup: the LP quotes a raw price and the broker adds a small markup before showing it to the client.
Commissions: a fixed fee per lot traded, common on raw-spread or ECN-style accounts.
Swaps and other fees: overnight financing differences and, in some cases, account or inactivity fees.

Revenue is therefore tied to volume. An A-book broker needs many active traders, or a few very large ones, to cover its costs, which include LP fees, bridge or aggregation technology and minimum deposit requirements at the LP.

STP and ECN: two flavours of A-book

STP (straight-through processing) usually means orders are passed automatically to one or more LPs without manual intervention. ECN (electronic communication network) usually refers to a setup where orders interact with a pool of prices from several LPs and participants, typically with raw spreads plus a commission. Both are forms of A-book execution, although the labels are used loosely across the industry. We cover STP in more depth in what is an STP broker.

What is a B-book broker?

A B-book broker, also called a market maker or dealing desk broker, keeps client trades in-house. When a client buys, the broker takes the other side of that trade on its own book instead of sending it to an LP. The broker is the counterparty.

Because many clients trade in opposite directions, a large part of the flow nets out internally. What is left is the broker's net exposure, the market risk it actually carries.

How a B-book broker earns money

Spreads and commissions, exactly like an A-book broker.
Client trading results: when clients lose in aggregate, that loss becomes the broker's gain. When clients win in aggregate, the broker pays out.
Swaps on positions held overnight.

B-book can be more profitable per client than A-book, and it does not require an LP relationship for every trade. That is why many new and growing brokerages start with a B-book model. But it comes with real market risk and a built-in conflict of interest that must be managed carefully.

B-book is a legitimate, widely used business model, but it only works long-term with disciplined risk management, fair execution and transparent disclosure to clients.

What is a hybrid brokerage model?

A hybrid brokerage model combines both approaches. The broker keeps some flow on its B-book and routes the rest to an LP on the A-book. In practice, most established brokers operate some kind of hybrid, because it lets them earn from uninformed flow while limiting losses from consistently profitable traders.

How hybrid routing works

1Segment clients: the broker groups clients by profitability, trade size, strategy (for example scalping, news trading, swing trading) and account history.
2Set routing rules: each group is assigned to B-book, A-book or a split. For example, new small accounts stay on B-book, while consistently profitable or very large accounts go to A-book.
3Monitor net exposure: the broker watches its total open position per symbol across the B-book.
4Hedge above thresholds: when net exposure on a symbol exceeds a limit, the broker hedges part of it with an LP, even if individual trades stay internal.
5Review regularly: clients move between groups as their behaviour changes.

This segmentation is often called building risk groups, and it is usually run from a dealing room or risk desk. We explain the practical side in risk groups and dealing room basics.

A-book vs B-book vs hybrid: comparison table

Factor	A-book (STP/ECN)	B-book (market maker)	Hybrid
Who is the counterparty	Liquidity provider	The broker	Broker or LP, depending on client group
Main revenue	Spread markup, commissions	Spreads, commissions, client net losses	Mix of both
Market risk for broker	Low	High	Medium, controlled by routing and hedging
Conflict of interest	Low	Higher, must be managed	Present on the B-book portion
Revenue predictability	Tied to volume	Can swing with client results	Smoother than pure B-book
LP relationship needed	Yes, for all trades	Optional	Yes, for the routed portion
Capital needed for risk	Lower market-risk buffer	Higher, to absorb client wins	Medium
Typical fit	Large, volume-driven brokers	New and growing brokers with strong risk tools	Growing brokers with a risk team

The table is a simplification. Real brokers mix elements, and the same label can mean different setups depending on who uses it.

Risks of each broker execution model

A-book risks

Thin margins: if volume is low, markups and commissions may not cover LP and technology costs.
LP dependency: outages, slippage or price changes at the LP pass through to your clients.
Counterparty risk: your funds held at the LP are exposed if that provider has problems.

B-book risks

Market risk: a group of clients on the right side of a big move can produce a large loss in hours.
Toxic flow: latency arbitrage, news spikes and certain automated strategies can drain a B-book quickly.
Reputational risk: if clients believe the broker manipulates prices or delays withdrawals, trust disappears.
Capital risk: the broker must hold enough capital to pay out winning clients.

Hybrid risks

Complexity: routing rules, hedging and segmentation need tools and skilled people.
Misclassification: a profitable client left on the B-book too long still costs money.

Transparency and how each model is perceived

Every model can be run fairly. What clients judge is the experience: real market prices, fast execution, clear account terms and withdrawals paid on time. A B-book broker that executes at real prices, discloses that it may act as counterparty and pays winning clients promptly earns the same trust as any other model.

Perception matters too. Some traders prefer brokers marketed as STP or ECN because they see less conflict of interest. Others care mainly about spreads, platform quality, fast withdrawals and support. Honest marketing is important: describing a B-book operation as pure ECN damages trust as soon as clients notice.

This article is educational, not financial advice.

Which model fits your brokerage?

Pure A-book tends to fit brokers with strong marketing reach, high expected volume, and a brand built on transparency.
B-book tends to fit new and growing brokers that want full control of pricing and execution, a business that is profitable from a smaller client base, and a clear risk policy backed by good tools and enough capital to absorb losing periods.
Hybrid tends to fit brokers that have grown past the startup phase, have a risk manager or dealing team, and want to protect the book from profitable or toxic flow.

Many successful brokerages build their business on their own book: they keep the flow in-house, price from their own feed and manage exposure symbol by symbol. If you are at the very beginning, our guide on how to start a forex brokerage walks through the full launch path.

How EVO helps you run your own book

EVO Platforms is a white-label brokerage technology provider. EVO is not a broker and does not hold client funds; it gives you the technology to run your own brokerage under your brand, with in-house execution and risk management built in.

Today, the EVO back office and risk tools let you price from your own price feed, control spreads and markups per symbol and group, set limits per symbol, set leverage per client, configure automatic margin call and stop out, control TP/SL, and suspend or disable accounts, all inside the same system as EVO-CRM. Risk groups and a dealing room are coming soon in EVO's back office.

Because pricing, execution and risk sit in one system, you see your exposure as it builds and can act on it straight away, without waiting on a third party.

Frequently asked questions

What is the difference between A-book and B-book?

In A-book, the broker sends client trades to a liquidity provider and earns from spreads and commissions without taking the other side. In B-book, the broker keeps trades in-house and acts as counterparty, so it also earns or loses based on client results. A-book carries less market risk; B-book can earn more per client but needs careful risk management.

Is a B-book broker a scam?

No. B-book or market making is a legitimate and widely used model, used by brokers around the world. Problems arise only when brokers manipulate prices, refuse valid withdrawals or misrepresent their model. A fair B-book broker executes at real market prices, discloses that it may be counterparty and pays winning clients promptly.

Is STP the same as A-book?

Broadly, yes. STP usually means orders are passed automatically to liquidity providers, which is a form of A-book execution. ECN is another A-book flavour where orders interact with a pool of prices, typically with raw spreads plus commission. The terms are used loosely, so it is worth checking how each broker actually routes orders.

How do hybrid brokers decide which trades to A-book?

They segment clients into risk groups based on profitability, trade size, trading style and history. Profitable, very large or high-risk accounts are typically routed to a liquidity provider, while other flow stays on the B-book. Many brokers also hedge net exposure per symbol once it passes a set threshold.

Which model should a new broker choose?

Many new brokers start with B-book because it does not require an LP for every trade and can be profitable with a small client base. It does require capital to absorb losing periods and a clear risk policy. The key is a platform with built-in risk controls: spread control, symbol limits, leverage per client and automatic margin call and stop out.

This article is for general information only and is not legal, tax or financial advice.

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