Introducing Broker vs White Label — Which One is Best?
There are a number of ways to start your own forex brokerage business, but the two stand-out models are Introducing Broker (IB) or White Label. The difference between the two is basically the scope of their functions and the degree of their autonomy, although both options have the potential to generate attractive profits. Find out how to start your own brokerage and which model better to choose.
Good brokerage firms regularly invest a large amount of money in the latest technology to attract more traders and are continually on the lookout for other ways to grow their business. Partnerships are an obvious choice. Some offer an opportunity to become an IB or to buy a White Label so as to grow their client base and earnings in a shorter time frame and with much less effort. Both options are in line with the broker’s goal of acquiring, converting and retaining end users who will trade on the primary broker platform.
In both these cases, the more trading volume generated through the platform, the higher the broker’s income. Hence, the most important part of this business model is attracting traders and retaining them within your system.
While an IB simply acts as an intermediary between an existing broker and its traders, a White Label broker is an entire business with more independence and control over its clients. In the following, we will look at each in more depth.
An IB’s role is to solicit clients for the Primary Broker by partnering with successful traders, money managers, investment advisors, financial website owners and other sites generating high visitor traffic.
The aim is to recommend the broker’s services and in return, get rewarded for the new clients that they bring. This may come as a fixed return or a percentage based amount relating to the future trading volume the new clients will make with the broker.
Referring clients to a broker can be done in multiple ways, from advertising the broker’s banner ads on the IB’s website, email marketing campaigns, or promoting a special offer that the broker may have, for example. An IB will receive a unique link that the broker uses to track any new customers that are introduced, along with access to a special area, allowing the IB to download promotional materials to start targeting clients.
If a client subsequently opens a trading account with the broker via the reference link, the IB will be rewarded in accordance with the agreed fee structure. Generally speaking, becoming an IB is a fairly good entry point to the Forex brokerage world and many IBs have reported success with their efforts.
A White Label program differs from an IB in that those interested in such a program actually prefer to open their own forex brokerage and have their own brand, rather than referring clients to the broker. Essentially, a White Label is an agreement to market another broker’s trading platform as if it were their own and is suitable for those looking to set up a Forex broker and establish their own brand in the industry.
With a White Label, the broker or technology provider will provide the whole solution including the trading platform and back-office support, and even allow the company to have its own brand. As White Labels earn from the trading volume of their clients, they function in a similar way to a regular brokerage.
As far as the White Label is concerned, it is a much cheaper way to launch a business as the provider can help with all aspects, from providing the latest technology, legal aspects, building a website and marketing programs. Other benefits include the quick launch of an online broker with regular support, avoiding the setup and running costs of a full dealing business model which requires a licence, acquiring hands on experience in the business, running your own independent brokerage, working with your own clients rather than referring them, and being able to control your own business to a large extent. For the broker, it is an effective way to diversify the income stream through licencing revenues.
White Label brokers run their business at a whole different scale to IBs. A White Label brokerage is a complete operational setup, with its own risk management, PSPs, customer support, etc. White Label agreements can take a variety of forms from simply leasing a trading platform and back-office support, to a complete entity with its own brand.
The ultimate decision about which brokerage model to choose depends on factors such as initial capital investment, risk management, and vision but if you’re planning to be a big player in the Forex industry, a White Label may be preferable. This is because as an IB you are essentially an agent of an existing business, without your own brand identity or brokerage infrastructure. With a White Label revenue and compensation models are far more flexible and you get access to a whole range of technology and assistance without having to undergo the enormous task of opening a brokerage by yourself.
The price of opening a White Label is indeed higher than an IB, but the reward is also significantly higher. Overall, launching a White Label has proved to be a very popular option since it is a quick and straightforward way to enter the Forex brokerage market.
Choose a Market Leader
B2Broker is a leading White Label technology provider, offering MT4/MT5 solutions that are sought by Forex brokerages and other players in the financial industry including cryptocurrency brokers, prime brokers, prime of prime brokers, liquidity providers, hedge funds, banks and HFT & prop-traders.
B2Broker’s White Label solutions enable brokerages to choose from a variety of options which include branded MT4/MT5 trading platforms, configuration of trade groups for your type of account, configuration of trading instruments and commission for them, automatic advanced daily HTML report with all parameters configured to personal specifications, Forex, CFD and crypto liquidity with a wide variety of trade tools, ready-made integrations: multi-level IB solution, single-level IB solution, PAMM/social trading platform, trader’s room (B2Core), payment gateway & cryptocurrency payment gateway, and lots more — all with professional 24/7 technical support. Get in touch with B2Broker today to discuss your White Label.
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