Hybrid Execution Partnership

A Hybrid Execution Partnership is an IB or affiliate arrangement with a broker that runs both A-Book and B-Book execution and routes each referred client to whichever model the broker chooses. Your compensation can shift depending on how the broker decides to handle that specific client's trades.

Understanding the two books is essential. In the A-Book (STP/ECN), the broker passes the client's order to a liquidity provider and earns a spread markup or commission — partner rebates are typically volume-based here. In the B-Book (Market Maker), the broker takes the other side of the trade internally and profits when the client loses — partner pay here is often a share of that client's net loss.

The risk for partners is dynamic routing. A broker might keep a profitable client on the A-Book (paying you a volume rebate) but move a consistently losing client to the B-Book to capture their losses — and depending on your deal, that switch can change or cut your payout. For example, a client trading 50 lots/month at $7/lot rebate earns you $350; if silently moved to a B-Book loss-share you didn't agree to, your visible volume rebate can vanish.

Hybrid execution is the industry norm at many brokers because it optimises their revenue, and it is not inherently bad. The problem is opacity. A fair hybrid partnership spells out, in writing, the routing criteria and exactly how you are paid under both books, so you can forecast earnings and defend the broker's integrity to your referrals.

The broker's dealing engine assigns each incoming client (or each order) to the A-Book or B-Book based on internal risk rules — factors like the client's profitability, trade size, instrument, or a risk score. Profitable and high-volume flow that the broker would rather offload is often sent A-Book to a liquidity provider; flow the broker judges likely to lose may be internalised on the B-Book.

Your partner compensation is layered on top of this routing. On A-Book clients you usually earn a fixed rebate per lot or a spread share. On B-Book clients your deal might pay a percentage of net client losses, a different rebate, or nothing at all if your contract only covers volume. Because the broker controls routing and can change it, the terms governing each scenario — and any notification you receive — determine whether your income is predictable.