What is the difference between a white label and an introducing broker?

What is the difference between a white label and an introducing broker?

It should first be noted that both constitute a certain type of partnership.

Introducing broker, IB - is a type of partnership between an introducing broker, which is only involved in front-office (customer relationship department), and the main Forex broker, which is involved in back-office (trade execution, trading, clearing, etc.). When a client approaches an Introducing Broker, the trading account and its operation are managed by the Lead Forex Broker, and the client is provided with advisory and support services by the IB.

Thus, the IB is an ordinary connecting link, an intermediary between the main Forex company and the clients. The main task of the IB is to attract and work directly with the end customers. In return, the main Forex broker pays a fee to the IB.

There are several systems of remuneration for prime Forex brokers:

  • for attracting clients (a fixed fee for opening an account through a referral link);
  • for account replenishment (% of the replenishment amount);
  • for client activity (% of transaction volume or % of trade spread).

Most often, IBs are individual employees who work through the Internet from home or in offices with a small staff. IBs can work with several prime Forex brokers at the same time, just as prime Forex brokers can deal with many IBs at the same time.

What are the advantages of IBs?

  • Easy start-up. This type of business does not require a large initial and/or ongoing investment.
  • Independence and freedom. An IB is his own boss. He is the one who decides how long to work and how much time to spend searching for potential clients and, accordingly, forms his own salary level.
  • No office. IB can work remotely from any place in the world.
  • Simplicity and flexibility. IB does not have to register itself as a legal entity. It's possible to provide services in the name of a physical person without any additional costs. The regulator of the relationship between IB and prime Forex broker is the usual contract.
  • No risks. IB does not bear any trading or operational risks.

White label, WL - this type of partnership is designed for companies and various financial institutions that want to provide services to enter the international financial markets under their own brand (name) or for companies that want to expand the range of services provided by the prime Forex broker. This plan is best for companies that already have their own client base. In essence, WL is a turnkey business.

This type of partnership is considered more prestigious than the partnership under the IB scheme. Of course, WL requires certain initial investments: it is necessary to register a legal entity, to spend the monthly cost of the full support of its back office, and to work within the law and generally accepted financial rules and regulations. Often, the cost of setting up a company and getting WL is comparable to the cost of creating and registering an offshore company. But, if we talk about the level of income that can be generated by the partner company WL, it (income) can be many times greater than the partner working under the IB scheme. Also, it is necessary to note that if WL-partner works with a licensed prime Forex broker, the WL company must completely follow the rules of the license.

The main functions of White label company:

  • full customer support;
  • own management and administration;
  • organization of marketing activities;
  • support of its own trading environment (own dealing department is possible);
  • maintenance of back-office (infrastructure, personnel).

What are the advantages of White Label?

  • Low initial costs (compared to opening your own brokerage company);
  • ready-made business model and investment solutions to increase the range of services;
  • reliability of proven technologies;
  • the trading platform is designed under its own brand;
  • possibility to create own trading conditions;
  • control of client activity;
  • confidentiality (both client and prime broker information);
  • possibility to develop own affiliate program;
  • absence of market risk;
  • full support of the IT infrastructure;
  • higher image.

What type of partnership to use, everyone must decide for himself. In the case of IB, you get complete freedom of action, flexibility, and the ability to connect several primary Forex brokers, but as a result - earnings will not be big, but monthly costs are minimal. In the case of White Label, you practically get a ready-made business with a good income opportunity, with a complete IT infrastructure and its support, you get the opportunity to implement your own investment solutions and develop your company, but on the other hand, your freedom and flexibility will always be limited and controlled by your prime Forex broker.

Have a good trade.

Start trading

by JustMarkets, 2022.11.22

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