Introducing Brokerage/Executing Brokerage Arrangements

An "Introducing Brokerage" arrangement involves two broker dealers, the introducing broker (IB) that directs or "introduces" an investment manager to trade with the executing broker (EB). The introducing broker would receive a predetermined rebate on all trades, and administers the soft dollar arrangement by using a portion of the commission to pay for research or brokerage services. The investment manager benefits from these types of transactions when they use several different brokers to execute trades, and in turn, only receive one soft dollar statement from their introducing broker.