Introducing Broker

Definition - What does Introducing Broker mean?

introducing broker is a broker dealer who introduces customer accounts to a clearing broker dealer.

Testopedia explains Introducing Broker

Most broker dealer do not self clear or carry customer accounts. Carrying customer accounts and clearing customer trades requires a large amount of infrastructure and capital to provide these services. Most small and medium size broker dealers find it easier to contract a larger broker dealer to provide these services for them. The introducing broker dealer will send all cash and securities to the clearing broker dealer. The clearing broker dealer will maintain all of the customer accounts. clear all trades and in most cases send the customers confirmations and statements.

Connect with us

Testopedia on Linkedin
Testopedia on Linkedin
"Testopedia" on Twitter

Sign up for Testopedia's Free Newsletter!