Dealing Desk in Forex Brokerage
A Complete Guide to Understanding the Dealing Desk Model
In the world of Forex trading, brokers operate under different business models, each with its own advantages. One of the most widely recognized is the Dealing Desk (DD) model, also known as a Market Maker. At Growth V Fintech, we help brokers set up and manage Dealing Desk operations with transparency, technology, and compliance — ensuring long-term profitability and client trust.
What is a Dealing Desk Broker?
A Dealing Desk broker acts as the counterparty to client trades. Instead of directly routing orders to the interbank market, the broker manages trade execution internally. This allows the broker to offer fixed spreads, instant execution, and better liquidity access.
Advantages of the Dealing Desk Model
- Fixed Spreads – Provide clients with predictable trading costs.
- Instant Trade Execution – No delays in order processing.
- Liquidity Control – Brokers manage orders internally for higher flexibility.
- Revenue Opportunities – Brokers earn from spreads and potential hedging strategies.
- Client-Friendly Environment – Stable conditions suitable for beginner and retail traders.
Challenges and Risk Management
While the Dealing Desk model offers multiple benefits, it requires robust risk management systems to handle exposure effectively. At Growth V Fintech, we implement:
- Real-time monitoring tools
- Automated risk controls
- Hedging strategies with liquidity providers
- Transparent reporting systems
This ensures brokers can balance profitability with fairness and trust.
Who Should Choose a Dealing Desk Setup?
- New Forex Brokers – Looking for a cost-efficient way to start.
- Retail-Focused Brokers – Offering beginner-friendly trading environments.
- Brokers Targeting Stable Spreads – Ideal for markets where fixed spreads are in demand.
1. What is CFD Dealing?
CFD dealing involves brokers facilitating trades where clients speculate on the price movements of financial instruments without owning the underlying asset.
The broker’s dealing desk decides how to handle client trades, either by hedging them in the market or taking the opposite side of the trade.
2. A-Book Model (Agency Model)
- Definition: The broker routes the client’s trades directly to the external market or liquidity providers.
- Broker’s Role: Acts as a middleman.
- Profit Source: Commissions or a small markup on spreads.
- Risk: Minimal for the broker — client losses or profits are passed to the market.
- Client Type: Usually used for professional, profitable, or high-volume traders.
Pros:
- No conflict of interest.
- Transparent pricing.
Cons:
- Lower profit margins for the broker.
- Requires relationships with liquidity providers.
3. B-Book Model (Market Maker Model)
- Definition: The broker takes the opposite side of the client’s trade — i.e., the broker is the counterparty.
- Broker’s Role: Acts as the market maker.
- Profit Source: Client losses = broker gains.
- Risk: High — if clients win, the broker loses.
- Client Type: Usually used for less-experienced or short-term traders.
Pros:
- Higher profit potential for the broker.
- No commission or lower spreads may attract clients.
Cons:
- Conflict of interest.
- Risk of large losses if clients win big.
4. AB-Book or Hybrid Model
- Definition: A combination of A-Book and B-Book, where the broker filters clients and decides which ones to hedge (A-book) and which ones to keep in-house (B-book).
- Decision Criteria: Based on trading behavior, profitability, risk profile, etc.
How It Works:
- Profitable or risky clients → A-Book (hedged).
- Loss-making or low-risk clients → B-Book (internalized).
Tools Used:
- Client profiling systems.
- Real-time risk management software.
5. CFD Dealing Desk Responsibilities
A CFD dealing desk manages:
- Order routing (A or B book)
- Risk exposure (especially B-book)
- Monitoring toxic flow (e.g., scalpers, arbitrageurs)
- Hedging strategies
- Spread management
- Relationship with liquidity providers (for A-book)
Summary Table
| Feature | A-Book | B-Book | AB-Book (Hybrid) |
| Order Routing | To market | Broker keeps position | Depends on client profile |
| Broker Risk | Low | High | Managed dynamically |
| Revenue Model | Spread + commission | Client losses | Combination |
| Conflict of Interest | No | Yes | Controlled |
| Used For | Pro clients | Retail clients | Mixed |
Why This Matters
Managing an AB-Book effectively is key for brokers to:
- Maximize profitability
- Minimize risk
- Stay compliant with regulations (e.g., MiFID II, ASIC, FCA)
- Offer fair and competitive pricing
Why Partner with Growth V Fintech?
With 10+ years of expertise in Forex solutions, we specialize in helping brokers set up and manage Dealing Desk models that align with global standards. From technology integration (MT4/MT5) to compliance, liquidity management, and risk strategies — we provide end-to-end support to ensure smooth operations and sustainable growth.
Build a successful Dealing Desk brokerage with Growth V Fintech.
We deliver innovation, transparency, and proven expertise to help your brokerage thrive in the global Forex market.