Forex glossary
B-book
B-book is a risk-management model in which a provider retains client exposure internally rather than hedging it externally. Opposing client positions may partly offset risk. The CFD agreement identifies the contractual counterparty; an A-book or B-book label does not itself change that counterparty.
Illustrative example
How does it work in practice?
In a hypothetical CFD, the client earns a 100 USD price gain and the provider has no external hedge. Its opposite exposure produces a 100 USD price loss, before fees or other positions.
A case to work through
Two opposing positions
Model: one client buys 6,000 EUR of CFD exposure and another sells 4,000 EUR; there is no external hedge.
- Gross volume is 10,000 EUR.
- Clients are net +2,000 EUR, leaving the provider with opposite exposure of −2,000 EUR.
What follows? Analyze directions and quantities rather than turnover alone.
Example boundary: This omits different entry prices, costs and additional contracts.
Gross and net
Text description of the diagram
- Client purchase: +6,000 EUR of exposure.
- Client sale: −4,000 EUR of exposure.
- Net clients: +2,000 EUR; the provider has opposite exposure.
A useful distinction
B-book / Market maker
Market maker describes the quoting role; B-book describes retained risk.
Check your understanding
Separate gross client volume from net provider exposure.
Show the answer and explanation
+4,000 EUR
9,000 − 5,000 = +4,000.
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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.