In short
- CFD brokers usually act as principal — the counterparty to your trade.
- Many run a mix of A-book (hedged) and B-book (internalised) flow.
- FCA rules require firms to manage conflicts and give best execution.
- Price manipulation against clients is misconduct — and rare at reputable FCA firms.
How brokers handle your trade
| Model | What happens | How the broker earns |
|---|---|---|
| B-book (internalised) | Broker keeps your position on its own books | Spread, financing, and client losses |
| A-book (hedged) | Broker offsets your position with a liquidity provider | Spread mark-up or commission |
| Hybrid | Some flow internalised, some hedged, often by client profile or size | Mix of the above |
Netting is also common: if one client buys EUR/USD and another sells, the broker can offset them and only hedge the difference.
Why this isn't automatically bad
Internalising flow lets brokers offer small trade sizes, stable pricing and commission-free accounts. What matters is that prices reflect the real market and that execution is fair regardless of whether a trade is hedged.
What FCA rules require
- Best execution — taking all sufficient steps to get the best possible result for clients. See best execution explained.
- Conflicts of interest policies that identify and manage the conflict.
- Treating customers fairly and the Consumer Duty's focus on good outcomes.
- Client money segregation, so the broker can't use your money for its own business.
Signs of unfair practice
- Slippage that only ever goes against you
- Frequent requotes on profitable orders but not on losing ones
- Price spikes on the broker's feed that don't appear elsewhere
- Profitable accounts closed or restricted without clear reason
If you see these, keep evidence (screenshots with timestamps, ticket numbers) and raise a complaint — see how to complain.
Frequently asked questions
What is a B-book broker?
A broker that keeps some client trades on its own books rather than passing them to the market, so it profits when those clients lose.
Is it legal for a broker to be my counterparty?
Yes. Acting as principal is normal for CFD providers. FCA rules require firms to manage conflicts of interest and deliver best execution.
Do spread betting companies cheat?
FCA-authorised spread betting firms must provide best execution and manage conflicts of interest. If you suspect unfair pricing, keep evidence and complain — and escalate to the Financial Ombudsman if needed.
CFDs and spread bets are complex instruments and come with a high risk of losing money rapidly due to leverage. Most retail investor accounts lose money when trading these products. You should consider whether you understand how they work and whether you can afford to take the high risk of losing your money.