RiskBeginner
Conflict of Interest
A situation where a broker's financial interest opposes the client's interest, most commonly in B-book models where the broker profits from client losses.
Last updated: February 1, 2026
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A broker operating a B-book takes the opposite side of client trades.
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When the client loses money, the broker directly profits from that loss.
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This creates a financial incentive for the broker to see clients lose.
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The broker may also use client trading data to inform its risk management, creating information asymmetry.
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Regulatory frameworks attempt to mitigate this through disclosure requirements and best execution obligations.