If you are looking at this article, then you’re probably already at a level where you understand that setting up your own independent brokerage with an in-house platform and your own version of software like Metatrader is not just extremely expensive, but very tedious.
Now, before figuring out the best way to launch your forex business without said costs and hassles, let us understand the three options available.
1. Introducing Broker (IB) is essentially a firm or individual that partners with a primary broker with an agreement to solicit clients for the latter. This a commission-based relationship where the Introducing Broker (IB) as the name suggests simply introduces traders to the primary broker who in turn pays the IB either in the form of a flat fee per client or spread sharing for as long as the clients introduced by the IB keeps trading with the primary broker.
The process of applying for and setting up an IB is simple. Fill up an IB application with the primary broker, get your unique Introducing broker ID, reference links, promotional materials and you are good to go.
2. Grey Label is a more economical version of a White Label. This solution is more for startups who might not want to make a huge investment just yet. In this arrangement, you obtain the Grey Label license from a Whitelabel broker and the branding of the Grey label broker is separate from that of the technology provider (Whitelabel provider).
Though this is the more cost-efficient way of launching your new forex business, the downside of users being confused with two different brands will always be an issue when it comes to brand recognition and loyalty. Moreover, apart from the monthly fee or commission paid to the MT4/MT5 WhiteLabel solutions provider, there will eventually be a cost and hassle involved with the transition to a White Label at some point. Not to mention, the dependability on them for all your technology needs, glitches, and downtime.
However, when compared to an introducing broker (IB), it does offer some additional benefits in terms of control over the client groups and relationships, allowing you to manage the spreads and leverage of your clients and also their deposits and withdrawals.
3. White Label is the ability to use the software (MT4/MT5, Web Trader or a Mobile Trader) and put your own branding on it. This solution is ideal for experienced individuals or firms who want to become forex brokers and create their own brand in the forex trading industry.
White Label solutions allow the end-user to identify with the platform as one that is owned by you and might even give the impression that it is developed by you (though that is not the case). The end-users associate all their activities with your brand and give you credit for making their transactions possible, ensuring brand recognition and loyalty.
A White Label solution is the complete package with end to end technology that can be customized based on your requirements. It is the fastest way to get your forex brokerage business up and running. You also avoid huge costs and time of setting up, testing and going live (a hundred thousand dollars and a year in most cases). Also, running a full-scale forex business model involves other complications such as licensing and putting the technology together. The White Label format allows you to gain an in-depth understanding of the entire business and prepares you for the day you have enough capital to set up and run your own independent brokerage.
The background of foreign exchange white label
There is no doubt that the huge foreign exchange market hides a lot of profit opportunities, whether it is for retail investors or institutions, this market is full of temptations.
It is noted that in particular, China's foreign exchange market is in a stage of rapid development, and the number of foreign exchange trading customers has also increased significantly. At the same time, there are also uneven levels of foreign exchange brokers in the market. Under the premise that opportunities and challenges coexist, many foreign exchange agents, financial institutions or companies in other industries usually transform into brokers when their business is doing well. Because of their lack of experience, they usually start with a white label. Including this year's big wave of internal trading transferring to external trading, some domestic companies also started their own transformation business from the white label.
In the initial stage of starting to be a broker, you will definitely encounter many problems related to the platform, such as which platform to choose, how to use the platform with the platform, how to configure the platform, how to connect traders to the online platform, and how to connect payment system and so on.
However, for start-up brokers, white labeling is actually an easier and faster way to enter the market. In order to avoid all these troubles, the broker can rent a part of the server from any company that provides such services and establish a white label company.
Many top brokers started with white-label companies at first, because the establishment of white-label companies will not incur high startup costs, and brokers do not need to purchase their own trading platforms.
（source: Sanfrix）
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