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A guaranteed introducing broker (GIB) is a legal entity or an individual that offers futures market brokerage services. A GIB has to be a member of the National Futures Association (NFA), which is responsible for registration and general supervision, and it must be registered with the Commodity Futures Trading Commission (CFTC) to whose regulation it is subject.
Furthermore, GIBs are subject to the regulation of the respective commodity exchanges. The operations of a GIB are guaranteed by a futures commission merchant (FCM).
Before granting the license for a GIB, the NFA requires the guarantor FCM to file a written guarantee agreement as well as certification concerning the accurateness and completeness of the provided information. The agreement fixes the FCM’s obligation to assume financial responsibility for the GIB’s futures market activities.
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A GIB takes customer orders and transmits them exclusively to its guarantor FCM for handling. While an FCM is able to mitigate the counterparty risk by, for example, obligating the customer to pay and maintain a margin deposit, a GIB does not accept any collateral regardless whether it includes money, securities, or property.
However, since all its accounts are carried by the guarantor FCM and due to the given guarantee, the GIB itself does not have to meet minimum capital requirements and does not have to provide financial reports.
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