When it comes to building a large database of new consumers, every broker faces difficulties. There are additional ways to boost any broker’s revenue, such as advertising, sending e-mails, SEO, and other traditional lead generation techniques that can work to reach out to new customers. With solutions such as Introducing Brokers (IB) and White Label brokerage programs, a broker can obtain a larger income in less time and with less effort. Read more here source link
There are numerous methods to get a piece of the Forex brokerage pie, but two stand out as attractive options for newcomers: becoming an Introducing Broker (IB) or creating your own white-label brand.
While each of these methods has drawbacks, they can also produce some good returns. We’ll go over them in this article to help you decide which one is best for your needs.
Introducing Broker vs White Label – Overview
For decades, the traditional Forex brokerage industry has stayed basically untouched. While brokerage firms devote significant resources in terms of money, manpower, and technology to attract more traders, they are always seeking new ways to expand their business, and a partnership appears to be an obvious solution.
This is when IBS and white-label possibilities come into play. They provide the principal broker with the possibility to develop their clientele and income in less time and with less work.
Introducing brokers and white-label firms are fundamentally similar. The broker’s purpose in both of these models is the same: to acquire, convert, and retain end-users who will trade on the primary broker’s platform.
In both circumstances, the bigger the trading volume on the platform, the higher the broker’s revenue and, as a result, the profit you will make. So, attracting traders and keeping them trading in your system is the most crucial component of your business plan.
The primary distinction between the two models is the breadth of their functions and their degree of autonomy. While Introducing Brokers just operates as go-betweens for the existing broker and his traders, white-label brokers are more full-fledged enterprises with greater independence and control over their clients.
Both IB and White Label are beginner-friendly and easier approaches. Let’s go over the differences and benefits of these two so you can decide which is ideal for you as a broker.
Introducing Brokerage or IB
An Introducing Broker solicits and accepts customer orders but does not accept money, property, or securities. The Introducing Broker must register with the Commodity Futures Trading Commission and carry all business accounts through a futures commission merchant on a fully disclosed basis.
At their most basic, IBs are essentially marketing firms that recruit traders for their broker partners. They assist traders in opening accounts on the broker’s platform, and the traders’ deposits are transferred immediately to the broker’s side. IBs typically receive commissions from brokers in the form of a predetermined return per referred user.
There are numerous techniques to refer traders to a broker, including email marketing campaigns, banner advertising on the IB’s website, special deals, and so on.
Typically, the broker will provide the IB with a unique ID link that will track new customers referred by the IB, as well as access to the broker’s promotional materials. More advanced IBs will develop their own marketing efforts for the broker as well as monitor his sales and retention.
Becoming an IB is a fantastic entry point into the Forex brokerage sector for anyone with a customer base interested in trading-from money managers and investment advisors to owners of popular financial blogs or forums, and even successful individual Forex traders.
An IB firm has substantially cheaper startup and running costs than a traditional brokerage because it does not incur technology or PSP fees.
The method for becoming an Introducing Broker is extremely straightforward, as long as the parameters specified by the Primary Broker are met. To obtain the unique ID, reference links, and promotional material, a form issued by the Primary Broker must be completed. After that, the Introducing Broker can begin prospecting for clients.
White Label brokerage
IBs operate on a much smaller scale than white-label brokers. A white-label brokerage is, in essence, a full-service brokerage firm with its own risk management, PSPs, call center, client assistance, and so on.
White-label partnerships can range from simple trading platform leasing to a wholly owned brand. White-label brokers, like their broker partners, profit off the volume of their clients.
However, their autonomy is limited in several ways. They cannot control several crucial characteristics, such as the symbols they would offer for trading and their opening and closing hours because they are merely leasing the trading platform with its server and feed from a primary broker.
In addition, the white-label broker does not support trading orders; all execution is handled by the principal broker. Apart from that, white-label brands operate like any other broker, with complete control over their trading conditions, spreads and commissions, and corporate structure.
Advantages of White Label Forex Program
The advantages of a white-label program are numerous: you get a trading platform branded with your logo, you are automatically regulated under the canopy of your major broker, and you have his back-office assistance, resources, equipment, and logistics.
Furthermore, your principal broker is responsible for reporting as well as all other administrative and regulatory procedures.
In a white-label arrangement, revenue and compensation models are also significantly more flexible, and it all depends on the specifics of your partnership agreement. All of this without the significant hassle of starting your own brokerage firm.
Obviously, the cost of establishing a full white-label brokerage would be more than that of an IB, and the procedure would take more time and effort. However, the payoff is substantially higher.
Finally, whatever brokerage model to choose is determined by aspects such as beginning capital investment, risk management, and vision. While Introducing Brokers may have an easier time at first, it is the white-label brokers who will be able to establish themselves as a market force and eventually become prime brokers.