What is the difference between an Introducing Broker and White Label?
Forex trading industry is growing so fast that everyone wants to foray into and grab a share in benefits. And it is natural, this is probably the only industry in the world that has seen tremendous growth in no of users as well as the amount of daily trading. The popular perception about forex trading industry is, there are just 2 simple dimensions in forex trading – traders and brokers. But the reality is far different from that. There are more than two ways to be a part of this amazing forex trading industry. But first of all, lets revise the basics. Here are the four main ways to indulge in forex trading.
Forex Trader – A forex traders is an individual who invests his money in currencies and earns by making sale of the currency at a higher rate. A forex trader can’t do trading all by himself, he needs support of forex brokers for that.
Forex Broker – A forex broker is an entity that is legally allowed to do facilitate the forex traders and do trading on their behalf, upon the promise of certain commission amount. Establishing a forex broking firm is a complex task and it also requires a solid financial stability.
Introducing Broker – An Introducing Broker is an individual or entity who works on behalf of the forex broker and manages a specific group of traders who are affiliated to him. The IBs work with both the main broker and the traders on shared commission basis.
White Label – A White Label is a broking firm that is licensed by the bog forex brokers to operate in its own name, take up trading requests from traders and get them executed on the main broker’s platform. This way, a white label firm operates independently while utilizing the systems of main broker.
So, if you are thinking about foraying into the forex trading industry as a broker, you can think about establishing your own forex trading platform and brokerage firm. This is a very complex process and it is safeguarded by so many rules and regulations of different countries. Also, you need to have a huge working capital to be able to provide broking services to numerous traders. But there are two ways to go about it without all the fuss – Be an Introducing Broker (IB) or start a White Label broking firm. We will compare them both in this article.
1. Introducing Broker (IB)
An Introducing Broker (IB) – as the name suggests – is an entity that introduces the trader to the broker. In simple words, they are like independent agents of the brokers who gets in touch with the potential traders and helps them through the sign-up process with the main (primary) broker. In this case, all the financial transactions as well as the technology functions are done with the primary broker. So, if you are thinking about getting into the forex trading industry for the first time, this is the best way to get in to the forex trading industry and learn the nuances of the industry.
2. White Label Brokerage
This is a little advanced level compared to the IBs. In fact, a White Label Brokerage firm is a small forex broking firm itself. It has its own risks, customers, support functions and outreach campaigns, except for one thing, they need access to the primary forex broker’s server and back office support to carryout trading activities. Also, the White Label Brokerage firms make their profits as per the trading volume they obtain from their traders. The terms and conditions between the White Label Firm and the traders are independent from the primary brokers and the operations are autonomous in case of white label brokerage.
What is the difference between IBs and WLBs?
The main difference between Introducing Brokers and White Label Brokerage is in terms of autonomy and scope of their functions. The IBs play the role of intermediates between the broker and the traders while the WLBs are themselves a broker who utilize the server and tech support of another primary broking firms. Also, IBs need to follow the rules and regulations of the broker firm and they have very limited freedom to decide terms and conditions with the traders while WLBs are a lot more independent compared to IBs. The White Label Brokerage can independently manage their relationship with the traders. The biggest factor to be considered here is the magnitude of earnings. The IBs earns as per the referrals they have forwarded to the broking firm and they get a reward for each successful referral as per the pre-decided terms. At the same time, the WLBs earn as per the magnitude of trading the traders do through their firm, the primary brokers do not have a say in that matter, which increases the potential earnings manifold.
The world of forex trading is tumultuous yet fun and most importantly rewarding. There is space for everyone, with all sorts of financial capabilities. And it offers a stupendous return on investment, that’s why it has become so much popular. You can also foray into the world of forex trading as a Forex Broker/ White Label Brokerage/ Introducing Broker or even a Forex Trader. Pheasantech will help you build your own forex broking platform and start your own business as a forex broker, with thorough consultation and very reasonable costs. Be it forex website development, MT4 integration as WLB, or your own new forex broking firm, Pheasantech has years of experience in the industry and you can ask for all the support that you need, in starting your own forex brokerage. Contact Pheasantech over Skype or just click here to get in touch.
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