📖 Financial Lexicon Term
What is A-Book?
An execution model where the broker routes client trades directly to a liquidity provider (LP). The broker earns revenue solely from commissions and markups, not from client losses.
Detailed Explanation
In an A-Book model, the broker acts as a true intermediary. If a client buys 1 lot of EUR/USD, the broker simultaneously buys 1 lot from an institutional liquidity pool (like a major bank). Because the risk is transferred, A-Book brokers want their clients to win and trade higher volumes, as it generates more commission revenue.
💡 Practical Trading Example
An ECN broker utilizing a 100% A-Book model passes all retail flow to external market makers.