An IB is an individual or an entity that solicits or accepts orders to trade futures contracts, commodity options, retail off-exchange forex contracts, or swaps, but does not accept payment from customers to support such orders.  17 C.F.R. § 1.3, Introducing Broker.  IBs maintain direct relationships with customers and match customers to counterparties that are interested in executing trades.  IBs may be affiliated with an FCM, either as a partner or as a direct subsidiary, and delegate trade execution to that FCM.

The CEA and CFTC regulations establish exemptions from the definition of an IB that depend upon individual facts and circumstances.  IBs may operate under a guarantee agreement with an FCM (“Guaranteed Brokers”) or as independent agents (“Non-Guaranteed Brokers”).  CFTC and NFA rules vary slightly for Guaranteed and Non-Guaranteed Brokers.  All IBs are required to comply with certain disclosure and recordkeeping requirements for customer transactions, but Non-Guaranteed Brokers are subject to additional requirements, including maintaining a minimum of $45,000 in adjusted net capital and filing semiannual financial reports with the NFA.