Introducing Broker (IB): A person or organization that solicits or accepts orders to buy or sell futures contracts or commodity options, but does not accept money or other assets from customers to support such orders.



On September 22, 1981, the National Futures Association (NFA) was granted registration by the Commodity Futures Trading Commission (CFTC) as a self-regulatory organization for the futures and options industry. Within a few months, the United States Congress ratified the CFTC’s actions and the Introducing Broker status came into being.

By January 2007, the NFA listed 1,476 registered Introducing Brokers and members of the NFA. While the number fluctuates slightly as some offices merge or their owners retire, the number of registered IBs has remained generally consistent for the past 26 years.

IBs have changed along with the industry since 1981. In the early years, IBs most often dealt with agricultural customers and products. IBs were generally located in the midwest, often in rural areas as a part of a grain elevator or feedlot. The IB office serviced local customers, frequently people living and farming in the immediate community, and many of the offices had a very seasonal business.

Today, only about 45 percent of all IBs describe themselves as primarily agriculturally oriented. Financial products such as the CME S&P 500® futures contracts, interest rates and foreign exchange are quite often a significant part of the IB’s business, while special focus offices generally conduct energies, metals and soft commodities, as well as Forex trading.

Illinois still has the largest number of registered IBs, with Florida, Texas, New York, California, Nebraska and Iowa following closely.

Today, because of inexpensive, fast information available about the markets available on the Internet and through Web sites, and equipment such as handheld quotation devices, IBs can offer customers products from around the globe 24 hours a day.

The order entry process has developed to the point that customers may enter their own orders from their personal computers. Many customers rely on the IB for risk management control and for advice, rather than the physical order process.

Running an IB is a buisness. It requires careful planning, good risk management and strict compliance. The Complete IB Handbook, 3rd Edition 2007, is the guide which will help you make decisions, provide support and get you off to a good start as an Introducing Broker.



About 116 of total 1,476 registered IBs are also registered as Commodity Trading Advisors (CTAs), and several are broker-dealers. Twenty-two of the total 1,476 registered IBs are Commodity Pool Operators (CPOs). Many IB offices offer related product such as crop insurance or are Registered Investment Advisors or licensed grain elevator operators. A few are floor brokers.






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