ICE Markets operates a 100% A-book model, hedging all trades with external counterparties. The company has no conflict of interest with clients and it is not interested in clients' losses, since it earns only from transaction commissions paid.
100% A-book model
Hedging 100% of clients positions and confirming this to any client by demonstrating back-office online.
ICE Markets operates a 100% A-book model, hedging all client positions with external counterparties. Any client can request for online demonstration of the orders executed by them with counterparties in the company's back office.
For B-book and "mixed" models, the company acts as a counterparty to the client's transactions, and the customer's earnings become the company's losses and vice versa.
An A-book model completely eliminates conflict of interests between the company and clients – ICE Markets does not act as counterparty to the client's transactions and is not interested in their losses.
For B-book and "mixed" models, the company bears additional risks, as it acts as a counterparty to the client's transactions, and the client's earnings become the company's losses and vice versa.
This reason has pushed quite a large number of companies into bankruptcy due to the very large amount earned by customers in a short period of time.
ICE Markets does not bear these bankruptcy risks because it does not act as counterparty to clients' transactions.
ICE Markets does not only declare but also confirm to any client that it operates an A-book model:
ICE Markets demonstrates its back office with counterparties at the client's request. The back office shows all the relevant hedging data.
Back office is similar to the ICE Markets personal account. It is hosted on the counterparty's domain and ICE Markets cannot tamper with any information contained in it.
ICE Markets provides customers with liquidity, aggregated from several counterparties. This gives a number of advantages: customers always receive the best prices, they are protected against low-quality order execution by a counterparty, and are completely anonymous to him.
Advantages of Liquidity Aggregation
There is no opportunity to choose the best price. There is need to execute an order at the price of a single counterparty.
If a counterparty offers an off-market price (pin), the stop order will be activated by this quote and the client will incur additional losses.
There is high probability that an order will be executed with large slippage, delay and other low-quality execution attributes.
There is no way to avoid force majeure events: loss in communication with the counterparty, no flow of quotes, etc.
Counterparties offer different prices. The aggregator allows you to choose the best of the proposed prices.
If the counterparty offers a non-market quote (pin), the stop order will not be activated by this quote.
The likelihood of execution with large slippage, delay and other low-quality execution attributes is minimized.
In the event of any force majeure (loss in communication with the counterparty, no flow of quotes, etc.), the order in question will be executed by another counterparty.
The counterparty receives the orders of each client in a personalized manner, and can worsen execution individually for individual clients trading profitably.
The counterparty receives client orders anonymously, and cannot determine which of the clients is trading profitably or unprofitably, and so cannot worsen execution on an individual basis.