Market StructureAgency Model
A-Book
A broker risk model in which client trades are hedged one-for-one with external liquidity providers.
What A-Book means
A-booking means the broker offsets client positions in the external market, so an incoming client buy is matched by the broker buying from a liquidity provider. The broker keeps no directional exposure and earns revenue from commission or from the difference between the provider price and the price shown to the client. Because the broker profits from turnover rather than client losses, the alignment of interest is usually presented as the model's main advantage.
A-booking is not free of complications. Hedging costs money, so brokers apply it selectively, often routing only larger or more consistently profitable clients externally. The broker still faces counterparty and credit risk with its providers, and it can incur losses if a hedge fills at a worse price than the client fill during fast markets. Traders should also note that being A-booked does not guarantee better execution; it guarantees the broker is flat, not that your fill was optimal.
Worked example
A client buys one standard lot of EUR/USD at 1.08505; the broker immediately buys 100,000 euros from a provider at 1.08502 and keeps the 0.3 pip difference, roughly 3 US dollars.
Related terms
- B-BookA broker risk model in which client trades are internalised and kept on the firm's own book rather than hedged externally.
- Market MakerA firm that quotes both a bid and an ask and takes the opposite side of client trades from its own book.
- STP (Straight Through Processing)An execution model in which client orders are passed automatically to external liquidity providers rather than dealt internally.
- Liquidity ProviderA bank, non-bank market maker or institution that streams two-way prices a broker can fill client orders against.
- Best ExecutionThe regulatory duty to take all sufficient steps to obtain the best possible result for a client when executing orders.
Frequently asked questions
What does A-Book mean in forex trading?
A broker risk model in which client trades are hedged one-for-one with external liquidity providers.
How does A-Book work in practice?
A-booking is not free of complications. Hedging costs money, so brokers apply it selectively, often routing only larger or more consistently profitable clients externally. The broker still faces counterparty and credit risk with its providers, and it can incur losses if a hedge fills at a worse price than the client fill during fast markets. Traders should also note that being A-booked does not guarantee better execution; it guarantees the broker is flat, not that your fill was optimal.
What is an example of A-Book?
A client buys one standard lot of EUR/USD at 1.08505; the broker immediately buys 100,000 euros from a provider at 1.08502 and keeps the 0.3 pip difference, roughly 3 US dollars.
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