What is an IB (Introducing Broker)? IB vs broker vs agent

An IB (Introducing Broker) is an agent that introduces clients to a broker. It is not another broker - it is a partner of the broker.

IB vs broker

• Broker: provides the trading account, quotes and settlement, and is regulated.
• IB: introduces clients to the broker; the broker pays commission based on their trading volume.

The IB's role in rebates

• The broker pays part of its commission to the IB.
• The IB returns part of that to the trader - that is the rebate.
• Your account stays with the broker; the IB never touches your funds.

Why this system exists

Customer acquisition is expensive for brokers, so working with IBs is efficient; traders, in turn, get a cost refund through the IB. Everyone gains.

Related: what is a forex rebate, how rebates are calculated. Not investment advice.