How it works
The distinction affects the legal relationship and potential conflicts, but both models can operate under regulation. Some firms use hybrid arrangements rather than fitting one simple label.
What to check
Check the broker's own execution disclosure and regulator classification. Compare realized execution quality instead of assuming one business model is always superior.
- Identify the legal role
- Check conflict disclosures
- Judge execution using evidence
Limits and risks
Business model alone does not determine safety or cost. A poorly regulated agency broker can be riskier than a well-regulated market maker, and vice versa.
Primary sources
BIS 2025 Triennial Central Bank Survey↗FCA: Contracts for difference (CFDs)↗General information only. Investment products can lose value, and terms, fees and regulation can change.