Working as a service provider in the financial market has become popular in the last few years, given the technological advancements and increasing demand that made these businesses profitable.
Offering services to retail brokers and investors is one way to capitalise on the huge capital circulating the market, and whether you are launching a white label brokerage or an introducing broker, there is money for grabs.
So, how do you decide on the best business model, and what’s the difference between a white label and an introducing broker? Let’s explain.
WL, white-label or turnkey solutions are services that were previously developed and require a small adjustment and alteration before being launched as the retail broker’s own product.
These services range from pre-built trading platforms, CRM systems, matching engines, crypto exchanges or payment gateways. These products are crucial for the work of the retail broker or institutional investors.
However, instead of building them from scratch, institutional brokerage firms may rely on a white-label solution provider to get a ready-to-use trading platform that can be customised and rebranded under the broker’s name.
White label technology is becoming increasingly preferable by investment banks and institutions because they are highly flexible and customisable. The provider company can build the software according to your business needs and in exchange, charge an in-advance fee with additional maintenance and service fees.
IB in Forex trading entails connecting brokerage firms with investors, hence the name “introducing”. The IB uses its network of connections and contacts, offers it the brokerage services of a particular company, and gets a cut from every registered client.
Introducing brokers do not engage in direct services, like providing liquidity, payments systems or trading integrations. Instead, they work as marketing intermediaries that bring new investors to the trading platform.
IB and WL are two common business models that you can launch if you want to benefit from the fortunes of trading markets. An IB system is suitable if you acquire a network of trading professionals and investors, while WL is better if you have the capability to develop software and trading platforms with a high degree of flexibility and customisation.
Both ways allow you to earn from the commission system. As an introducing broker, you earn a cut from every newly registered trader. On the other hand, turnkey solution providers charge a fixed amount for providing the system, in addition to additional services that can be offered at a set price.
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