A book / B book – What are order books?

A book means that the order is executed directly in real, liquid trading. The broker in this case is an intermediary, not a provider(no dealing desk).

In B book the order executes with the order of your broker, who is the other party to the transaction and organizes the trading market(Market Maker). This model is fraught with conflicts of interest so when you gain, the broker loses. You can buy instruments this way at a better price (lower spread), as well as be exposed to loss by broker abuse.

A broker can also use a hybrid order execution model by executing a trade in both Book A and Book B – Book B for losing clients and Book A for gaining clients.