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April 29, 2016

What exactly is White Label in Forex? Merits and demerits?

You might have seen “White Label” in some partnership sections along with PAMM/MAM and IBs.

Here we will explain what is White Label and what is the merit and demerit of being one.

What is White Label Program?

It doesn’t matter whether you are an established broker or a start-up company, the white label partnership is designed to take your business to a whole new level.

With the white label program, your business will gain access to a level of technology and liquidity that is unrivaled in the marketplace.

Or, if you prefer, you can access its liquidity only option – with a host of flexible connection choices.

White Label is like a mini-broker, which is subject to the main broker at all times, or you can say that it is the next level for IBs.

IBs are just promoting the brand of the main brokers and earn profits as a commissions by referring traders to the broker.

But White Label is a bit advanced model.

White Label acts as one broker by themselves with its own brand/logo and earn profits as a commissions by getting traders to trade.

Although it looks like an independent broker, the trading servers and conditions are restricted by the main brokers and similar to it.

So if you are not satisfied with being just an IB, you can act as a broker and have more opportunities to earn more traders.

Who is this white label program right for?

White label partnerships have been designed with two types of business in mind:

1. Brokerages:

If you have a client base in place and a steady flow of Forex or CFD volume then the flexible solution offered by white label partnership is ideal for your company.

2. Start-ups:

Start-up companies can benefit from full access to the price aggregation software, as long as they have a complete business plan in place.

Unbranded white label solutions

If you’re a money manager or a broker with a large introducing client base then you will want closer control over the trading environment available to your clients.

This is where the unbranded white label program comes into its own, with greater margins without the compliant and regulatory responsibilities of a complete white label program.

Many White Labels may earn only spread commissions

One demerit of being a White Label is that even if it costs you much and have your own brand as a broker, the profit you can earn is always just the commissions generated by the spread or trading commissions.

So you will earn profits just like other IBs.

But you will have the opportunity to attract more clients as you have your own brand as a broker.

Why brokers want its White Labels?

Many brokers want its White Labels.

The main reason is because the main broker can cover orders of traders earned by its White Labels and generate more profits by doing that.

Meaning that the main brokers are not aiming for a part of the spread/trading commissions of White Labels, but they are aiming for more bigger profits.

So White Labels take their own commissions by by the spread markups or extra trading commissions, meanwhile the main brokers will hedge clients’ trades and earn more larger profits.

So it is a win-win relationship of course.

Demerit of White Labels

One biggest demerit of a White Label is that they cannot afford much money because they earn only small profits by the markup spreads.

So it often happens that a White Label broker faces bankruptcy after an economic shock like “Swiss Franc Shock”.

The program itself is a win-win relationship, but still a White Label is just another tool for brokers to earn more profits.

So if you are not familiar with marketing and promotions to attract clients, you may be not suited for a White Label program.

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