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.
Compared to a Grey Label solution, White Label also offers you a larger degree of control over your business and clients.
Now that we’ve understood the basics of the three options available to anyone looking to launch a forex business, let’s relook at the reason we are here in the first place to further understand the best option for you.
If you recall, the reason we are looking at these options is mainly the cost involved with creating your own independent brokerage. Though the hassles of licensing and incorporation is also a big reason, the cost factor definitely takes the cake. With this in mind, let us now figure out the best option.
Though the Introducing Broker option is cost-effective, the existence of Grey Label rules out the IB option for most. However, it is worth looking at if you’re someone who does not want to spend much time on this business, but have contacts at your disposal which you might as well leverage by introducing them to someone who runs an Fx brokerage and gives you a cut.
Moving on, the Grey Label option as we previously established is probably the more cost-efficient way of launching a new forex business. That being said, we wouldn’t be wrong in assuming that you as an entrepreneur understand that the cost of launching or setting up is only the beginning.
What matters and should weigh into your decision are the ongoing costs such as commissions and maintenance fees. With a Grey Label having a much lower set up cost than a White Label, the commissions are usually high when compared to the commissions and maintenance fees of a White Label. Also, the fact that with a White Label, you are already recognized as a brand that offers end to end solutions makes a huge difference and eliminates the transitional cost that comes with a Grey Label wanting to scale up at some point.
With all this information, there still is a dilemma as most White Label solutions not only have a huge setup fee and a monthly maintenance fee but also charge a commission on spreads. This is where we come in.
With a White Label solution like ours at Sanfrix, there are no commissions or hidden costs on your trading volumes. The setup fee and monthly maintenance fees are the only charges involved. Apart from the assurance of uninterrupted and secure trading, we also offer a fully tailored solution including hosting and connectivity. Additionally, we specialize in developing custom plugins that are fully compatible with MT4/MT5 servers.
We also offer free CSO-as-a-service. Yes, you read that right, our dedicated Chief Success Officer will not just be your strategic consultant, but will also offer continued 24/6 support for all your operational needs.
Don’t just take our word for it, ask any of our customers who have been with us for years for the very same reasons. Go on, request a demo or book a free consultation today!
