Guaranteed Introducing Brokers vs. Independent Introducing Brokers

Vision Financial Markets clears for Guaranteed Introducing Brokers, Independent Introducing Brokers as well as Foreign Introducing Brokers*. The majority of our Introducing Brokers ("IBs") are guaranteed, but we also clear for many independent firms. Since we are self-clearing members of the various exchanges we cater to independents as well as guaranteed firms, whether they are start-up operations or existing firms.

There are some key differences between Guaranteed IBs and Independent IBs. Please keep the following in mind when contemplating which type of relationship you wish to seek with a clearing Futures Commission Merchant ("FCM"):

Guaranteed Introducing Brokers:

• Do not have to maintain a particular level of net capital;
• Guaranteed by a particular FCM whereby the FCM agrees to be jointly and severally liable for all of the IB’s obligations under the Commodity Exchange Act;
• Required to introduce all of their business to the FCM which guarantees them;
• Must submit promotional material to FCM’s Compliance Department; and
• Do not have financial reporting requirements.

Independent Introducing Brokers:

• Must maintain adjusted net capital of at least $45,000;
• May introduce business to any FCM (not just one);
• Regulate their own compliance procedures; and
• Required to maintain an accounting system that records all of the firm’s financial activity and follows U.S. generally accepted accounting principles.

Note that many start-up firms prefer to begin as a Guaranteed IB and then as their business grows, they may consider becoming independent, if necessary. Many successful firms decide to remain guaranteed because they just simply do not need to utilize more than one FCM (which means dealing with multiple back-offices, new accounts departments, risk management departments, etc.)

Alternatively, some firms that are independent decide to seek a guarantee because they no longer wish to regulate their own compliance procedures. If you decide to begin as a guaranteed firm or vice versa, it may be possible to switch to the other when such a need arises. Please note, there are stricter standards that must be met in order to become guaranteed. Since Vision supports both guaranteed and independent firms, we are happy to work with you in either capacity. We welcome the opportunity to talk about your specific circumstances and needs to help you determine the appropriate path to take.

* Foreign IBs are not registered with the National Futures Association so they are neither guaranteed by a FCM nor does a FCM guarantee their compliance procedures. Foreign IBs are non-U.S. individuals or entities operating outside the United States. None of the clients of a Foreign IB can be U.S. citizens or U.S. domiciled. Otherwise, registration would be required with the National Futures Association (and the IB would need to either find a guarantor or meet the requirements to be independent).

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