Forex glossary
A-book
A-book is a risk-management model in which a provider hedges client exposure through external transactions. The provider may still be the client's contractual CFD counterparty; external hedging does not eliminate every conflict of interest.
Illustrative example
How does it work in practice?
Suppose you buy a CFD representing 10,000 EUR. The provider makes a separate hedge transaction with a bank, but your client contract remains with the provider rather than the bank.
A case to work through
Two contract references
Model: a client contracts for a CFD with firm A; A hedges with bank B.
- Identify A as the party named in the client agreement.
- The A–B hedge does not itself replace the client counterparty.
What follows? Assess A and its execution policy separately.
Example boundary: This diagram does not establish either firm’s solvency.
Two separate contracts
Text description of the diagram
- Client–provider: The client agreement names firm A.
- Provider–bank: A makes a separate hedge with B.
- Risk assessment: The hedge does not transfer the client agreement.
A useful distinction
A-book / B-book
B-book retains exposure internally; A-book describes external hedging.
Check your understanding
Separate the client agreement from the external hedge.
Show the answer and explanation
The client agreement with A
It identifies the party owing obligations to the client.
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Read the fuller explanation
Related terms
Sources and documentation
- FCA — CP16/40, Chapter 2: CFD provider business models
Historical consultation, sections 2.2 and 2.9: the CFD counterparty and external hedging are separate matters. This is not evidence of current leverage limits.
Document read:
The example illustrates the mechanism. Check current account conditions and instrument specifications with the provider.