Document TIB-FRM-BR-1.0
Issued 16 April 2026
Module of TIB-FRM-1.0
Verification Module — Brokers & Dealers
Twenty-four binding criteria added to the universal Standards (TIB-IS) for verification engagements with brokers, dealers, and execution venues serving retail, professional, and institutional participants.
© 2026 Stratinova LTD. All rights reserved.
About this module
This module (the BR Module) extends the universal TIB Integrity Standards with criteria specific to brokers and dealers — firms that execute, route, internalise, or make markets in financial instruments for retail or professional participants. It applies whether the broker operates an STP, A-book, B-book, or hybrid model, and whether the firm is regulated by a statutory authority in any jurisdiction (TIB verification is independent of and additional to such regulation).
The module adds twenty-four binding criteria (BR-1 through BR-24) organised under eight themes: best execution, order routing, slippage telemetry, dealing-desk independence, client-money safeguarding, conflict of interest, negative-balance protection, and bonus / leverage / onboarding controls. These are added to the universal pillars without relaxing them.
The module is informed by the FX Global Code (Global Foreign Exchange Committee), MiFID II conduct-of-business rules where analogically relevant, and IOSCO Principles 24-30 (intermediaries). It does not assert conformance with any of those instruments; the broker's regulatory compliance is assessed by the firm's competent authority, not by TIB.
Verification Module — Brokers & Dealers
Twenty-four binding criteria with rationale, requirement, evidence rubric, illustrative cases, and cross-references.
Scope
This Module applies whenever an engagement covers a Firm whose activities include the execution, routing, internalisation, or market-making of orders for clients in financial instruments — including foreign exchange, contracts for difference, equity, options, futures, and digital-asset spot or derivative instruments.
Joint application
Where the broker also operates a funded-trader programme, the Prop Firms Module (TIB-FRM-PF) is invoked jointly. Where the broker holds client funds, the Custodians Module (TIB-FRM-CU) is invoked for the custody arrangements.
Out of scope
This Module does not assess regulatory licensing in any jurisdiction, the merit of the broker's investment offering, or the commercial pricing of services. It is concerned exclusively with operational integrity in execution, safeguarding, and client-facing conduct.
Definitions
- Best Execution — the obligation, where it applies, to take all sufficient steps to obtain the best possible result for clients, taking into account price, costs, speed, likelihood of execution and settlement, size, nature, and any other relevant factor.
- A-book — execution model in which client orders are externalised to liquidity providers; the broker bears no market risk.
- B-book — execution model in which the broker takes the other side of client flow and bears the resulting market risk.
- Hybrid — combination of A-book and B-book, with allocation criteria internal to the broker.
- Last Look — a practice whereby a liquidity provider may reject a price-improved or stale quote within a brief window after the client has requested execution.
- Internalisation — matching client flow against the broker's own book or against opposing client flow, without external execution.
- Negative Balance Protection — a contractual undertaking by the broker that client losses on leveraged positions will not exceed the funds deposited.
Theme map
| Theme | Criteria | Universal pillar | Section |
|---|---|---|---|
| Best execution | BR-1, BR-2, BR-3 | TIB-IS.3 Execution | § 4 |
| Order routing | BR-4, BR-5 | TIB-IS.3 Execution | § 5 |
| Slippage telemetry | BR-6, BR-7, BR-8 | TIB-IS.3 Execution | § 6 |
| Dealing-desk independence | BR-9, BR-10 | TIB-IS.1 Governance / TIB-IS.3 Execution | § 7 |
| Client money safeguarding | BR-11, BR-12, BR-13, BR-14 | TIB-IS.2 Capital | § 8 |
| Conflict of interest | BR-15, BR-16, BR-17 | TIB-IS.1 Governance / TIB-IS.6 Disclosure | § 9 |
| Negative-balance protection | BR-18, BR-19 | TIB-IS.6 Disclosure | § 10 |
| Bonus, leverage & onboarding | BR-20, BR-21, BR-22, BR-23, BR-24 | TIB-IS.5 Risk / TIB-IS.6 Disclosure | § 11 |
Best execution
Execution policy publication and version control
A written, accessible execution policy is the foundation of best-execution claims. Version control demonstrates that the policy is actively maintained and that historical positions can be reconstructed.
A written best-execution (or order-execution) policy shall be published, accessible without authentication, and refreshed at least annually. The policy specifies execution factors, their relative weighting by client category, and the venues considered. Version identifier and effective date are visible.
Execution monitoring
A best-execution policy is meaningful only if execution outcomes are monitored against it and adverse patterns trigger investigation.
Execution outcomes shall be monitored periodically (at least quarterly) against the published policy. Reports shall be reviewed by an oversight function independent of the dealing desk. Material adverse patterns shall trigger documented investigation and, where warranted, policy amendment or routing change.
Execution-quality reporting to clients
Periodic execution-quality disclosures convert internal monitoring into a client-facing accountability mechanism.
Periodic execution-quality summaries (annual at minimum) shall be made available to clients on request, covering: average spread per major instrument; slippage profile; order-rejection rates; and the top execution venues by class.
Order routing
Routing transparency
The set of venues, liquidity providers, and counterparties to which orders may be routed materially affects execution quality. Disclosure enables clients to assess whether the routing aligns with their interests.
The set of venues / LPs / counterparties to which client orders may be routed shall be disclosed in the execution policy. Material additions are pre-notified or surfaced in the next routine policy update. The criteria by which the broker selects routing shall be documented.
Internalisation disclosure
Where client flow is internalised (matched against the broker's book or other client flow), the conflict and the methodology for internalisation must be disclosed for the practice to be defensible.
If client flow is internalised in whole or in part, (a) the practice is disclosed pre-trade; (b) the criteria for internalisation are documented; (c) the broker can demonstrate that internalised executions meet the same execution-quality standard as externalised flow.
Slippage telemetry
Slippage measurement
Slippage is the empirical measure of execution quality. Measurement against a defined benchmark converts client expectations of "fair execution" into a verifiable signal.
Slippage shall be measured per instrument class with disclosed methodology — benchmark (requested price, BBO at receipt, mid), measurement window, and aggregation method. A representative sample over the trailing twelve months shall be disclosable on client request.
Symmetric slippage handling
Asymmetric slippage — where favourable price moves accrue to the broker and adverse moves to the client — is a hidden cost. Symmetric handling is the integrity baseline.
Slippage allocation shall be symmetric across favourable and adverse moves. Where asymmetric slippage is operated for legitimate reason (e.g. hedging windows), the asymmetry is disclosed pre-trade and the magnitude is material to the price-improvement claim.
Last-look disclosure and use
Last look is a defensible practice when used to manage credit risk and price-staleness on streaming quotes; it is indefensible when used for risk-free price improvement against the client.
Where the broker or its LPs operate last look, (a) the use is disclosed; (b) hold time is bounded and documented; (c) the rejection ratio per LP is monitored; (d) last look used for risk-free price improvement is prohibited.
Dealing-desk independence
Dealing-desk separation from client-account decisions
Where a broker takes the other side of client flow, the same personnel making market-risk decisions cannot be making decisions about whether the client's account is honoured (closures, restrictions, profit invalidation). This is a structural conflict.
Dealing-desk decisions shall be organisationally separated from determinations affecting the participant's account standing — closures, restrictions, profit invalidations. Reporting lines, role definitions, and a control matrix shall demonstrate the separation.
Risk team independence
The risk function, where it makes account-standing decisions, must not report exclusively to commercial leadership whose performance is measured by revenue retained from client flow.
The risk function shall report on a basis that does not depend solely on commercial leadership for performance assessment, remuneration, or termination. Where applicable, dual-line reporting (commercial + board) is appropriate.
Client money safeguarding
Segregation arrangement disclosure
Clients must understand the depth of segregation applied to their funds, the institutions holding them, and the protections available on insolvency.
Where client funds are held, the segregation arrangement shall be disclosed: institution(s); depth (statutory trust, ring-fenced operating account, omnibus, individually segregated); applicable insolvency protections in the relevant jurisdiction.
Reconciliation cadence
Daily reconciliation between client-money balances and external-account balances is the operational test of segregation integrity. Anything less risks accumulated breaks that may not be detected before harm crystallises.
Reconciliation shall be performed daily for liquid asset classes. Breaks shall be investigated within a documented SLA (typically end of next business day for material breaks). Break register and SLA document shall be retained.
Custodian due diligence
Client-money safeguarding is only as strong as the institutions holding the funds. Diligence at onboarding and refresh ensures that creditworthiness and segregation continue to meet expectations.
Documented due diligence shall be performed on each custodian or banking partner at onboarding and refreshed at least annually, including credit assessment, segregation arrangement verification, and insolvency-protection review.
Client money does not finance broker operations
Where the broker uses client money to finance proprietary trading or operating expenses, the segregation is illusory. The structural test is whether broker insolvency would impair client claims.
Client funds shall not be used to finance the broker's proprietary trading, operating expenses, or affiliate transactions. Internal controls demonstrate the prohibition; external audit (where conducted) confirms.
Conflict of interest
Pre-trade conflict disclosure
Material conflicts — operating a dealing desk against client flow, payment for order flow, internalisation, affiliate venues — affect client decisions and must be disclosed before account opening.
All material conflicts shall be disclosed in writing before account opening. Conflicts include: dealing-desk operation against client flow; payment for order flow; internalisation; affiliate ownership of venues; spread or commission rebates received from third parties.
Conflict-management framework
Disclosure alone does not manage conflicts; the firm must have a documented framework that controls how conflicts affect operational decisions.
A documented conflict-of-interest framework shall identify conflicts, set out the management approach (avoidance, control, disclosure), and assign ownership for periodic review.
Affiliate-transaction transparency
Where the broker routes flow to affiliated venues or pays commissions to affiliated marketers, the client benefit must be evidenceable, not merely asserted.
Affiliate transactions shall be disclosed; the broker shall be able to demonstrate that affiliate routing or payment does not adversely affect client execution quality compared to non-affiliate alternatives.
Negative-balance protection
Negative-balance treatment policy
On leveraged products, gap moves can produce client losses exceeding deposited funds. The broker's policy on negative balances is decisive for what the client actually owes.
The broker's policy on negative balances shall be published. If negative-balance protection is offered, conditions, exclusions, and any per-event cap shall be clearly stated. If not offered, the absence of protection is explicit.
Stop-out and margin-call discipline
Stop-out logic is the primary mechanism preventing negative balances. Discipline in trigger application and audit logs determines whether the policy is actually operative.
Stop-out and margin-call logic shall operate as documented; audit logs shall record trigger events with timestamps and equity readings; sampled events demonstrate consistent application.
Bonus, leverage & onboarding
Bonus and credit terms
Deposit bonuses and trading credits are frequent sources of mis-selling complaints when activation, withdrawal, and forfeiture conditions are unclear.
Where deposit bonuses or trading credits are offered, activation, withdrawal, and forfeiture conditions shall be stated in plain language at the point of offer.
Leverage disclosure and segmentation
Leverage is the principal risk amplifier in retail trading. Maximum leverage and the criteria for client-category segmentation must be transparent.
Maximum leverage offered per instrument class shall be disclosed. Where leverage is segmented by participant category (retail, professional, institutional), the basis for categorisation shall be documented and applied consistently.
Onboarding KYC / AML
KYC and AML controls protect the firm and the financial system; thin onboarding controls are a precursor to broader integrity issues.
Onboarding shall include identity verification, source-of-funds enquiry where appropriate, sanctions screening, and PEP screening. Procedures shall be appropriate to client category and jurisdiction.
Suitability / appropriateness assessment
Where the broker offers complex or leveraged instruments, an assessment of client knowledge and experience — not merely a click-through "I am professional" — is the integrity baseline.
For complex or leveraged instruments, an appropriateness assessment shall be conducted at onboarding. Negative outcomes are documented and the client warned where they nonetheless proceed.
Complaints handling
Complaints are an early-warning system. A documented procedure with response SLAs and an oversight cycle converts complaints into operational improvement.
A documented complaints procedure shall set out submission channels, acknowledgement and response SLAs, escalation pathway, and an oversight cycle. Complaint volumes and themes shall be reviewed by an oversight function.
Public Report sections
In addition to universal Public Report sections, every BR Public Report shall include:
- Execution model declaration — STP / A-book / B-book / hybrid; internalisation share where applicable;
- Segregation arrangement summary — institutions, depth, jurisdictional protection;
- Conflict-of-interest disclosure — one-line summary alongside Determination;
- Negative-balance treatment — whether NBP applies and any cap.
Engagement-specific evidence pathway
| Evidence | Source | Frequency / scope |
|---|---|---|
| Execution policy review | Public-facing document + version archive | Once + change history |
| Slippage telemetry sample | Broker's execution-monitoring system | 30-day sample, all instrument classes |
| Reconciliation log | Treasury / operations | 30-day daily-close sample |
| Custodian confirmation | Direct to custodian under tripartite consent | Once |
| Account-opening flow | Live signup walkthrough | Once per material jurisdiction |
| Last-look statistics | LP-level rejection register | 90-day sample if last look operates |
| Conflict register | Compliance function | Current state + trailing 12-month review minutes |
| Complaints register | Customer support / compliance | Trailing 12 months |
Limitations
- TIB does not opine on the regulatory adequacy of the broker's licensing in any jurisdiction;
- Slippage observations reflect the sampled period; periods of exceptional market conditions may produce different outcomes;
- Where the broker operates white-label or introducing-broker arrangements, the scope of TIB review is limited to the audited entity unless the engagement specifically extends to affiliates;
- Custodian credit assessment is reviewed for process; TIB does not opine on counterparty creditworthiness.
Module changelog
| Version | Effective | Approved by | Notes |
|---|---|---|---|
| TIB-FRM-BR-1.0 | 16 April 2026 | TIB Standards Committee | Initial publication. 24 binding criteria across 8 themes. |
Normative annex.
| Universal pillar | Module criteria contributing |
|---|---|
| TIB-IS.1 Governance | BR-9, BR-10, BR-15, BR-16 |
| TIB-IS.2 Capital & Safeguarding | BR-11, BR-12, BR-13, BR-14 |
| TIB-IS.3 Order Handling & Execution | BR-1, BR-2, BR-3, BR-4, BR-5, BR-6, BR-7, BR-8, BR-19 |
| TIB-IS.4 Payout Integrity | (addressed in universal criteria for brokers) |
| TIB-IS.5 Risk & Compliance | BR-22, BR-23 |
| TIB-IS.6 Disclosure & Conduct | BR-15, BR-17, BR-18, BR-20, BR-21, BR-24 |
Informative annex.
| Document code | TIB-FRM-BR-1.0 |
| Issuing authority | TIB Standards Committee |
| Effective date | 16 April 2026 |
| Next review | 16 April 2027 |
Issuing entity
Stratinova LTD
Cyprus HE475207