The following is a guest editorial courtesy of Jay Mawji, Managing Director at INFINOX.
Starting a brokerage firm requires time, money, and knowledge of the financial markets. It can be difficult to get started but, in recent years, white label solutions have made things a lot easier. This guide will explore the rise in the popularity of white label partnerships and how you can use them to offer FX and CFD trading in a cost-effective way.
An Opportunity to Start or Expand – What is a White Label?
Starting a brokerage firm can be tough. As well as issues of market access and liquidity, compliance, and licencing, are hurdles that all new companies have to overcome. In recent years, white label solutions have become an easy and effective way to not only get started in the financial world but get ahead.
A white label is a company built on the foundations of another. In finance, for example, IX Prime offers white label solutions to companies starting a brokerage firm. As a liquidity provider, IX Prime provides liquidity as well as the necessary tools through which FX and CFD trading is possible. Brokers can tap into these resources then add their own branding and supplementary services (such as customer support) to create a trading site.
White label partnerships not only give brokers a jump start, but they eliminate many of the challenges associated with forex and CFD trading. Liquidity is often an issue. IX Prime is a liquidity provider, which means they provide the pricing of instruments that your clients will trade. Managing liquidity isn’t easy, which is why brokers often choose white label solutions.
There are also costs to starting a brokerage firm. The cost of registering a business and getting a licence can be in excess of $10,000. From there, you’ll need a corporate bank account which often requires a significant minimum deposit, in some instances it can be up to £50,000. Once you’ve covered those costs, you’ll need a website, staff, an office and trading software such as MetaTrader 4.
All of these necessities cost thousands of pounds, meaning the price of starting a brokerage firm could be £100,000 or more. These costs can be prohibitive and, moreover, a risk. Forex and CFD trading are risky and profits aren’t guaranteed. Becoming a white label broker doesn’t guarantee a profit. However, it does reduce the costs of setting up a brokerage.
The Growth White Label Partnerships Present – Why Become a White Label?
The immediate benefit of using white label solutions to set up a brokerage is cost. Although there are costs involved, they’re lower than they would be if you created a custom product. There are no capital requirements because liquidity is provided by the white label provider. A white label also doesn’t have the same licencing and operating costs. There are costs to bear, but not at the same level.
For example, running a Metaquotes suite of platforms, technology solutions, hosting and resourcing could cost in excess of $50,000 per month. IX Prime white labels get access to MetaTrader 4 and MetaTrader 5 as part of their package. That’s just one cost of many that white label brokers don’t have to account for. Again, white label partnerships aren’t free. However, the monthly fees are significantly lower than they would be if you tried to do things independently.
In addition to reducing your costs, white label solutions allow you to get started in weeks rather than months as the foundations have already been laid. IX Prime is a provider that has liquidity within the forex and CFD trading sectors. That means white label brokers get instant access to 300+ instruments, LD4 hosting servers and real-time price data. White label partners also get access to analytics, order and management tools, and a dedicated account manager.
Building this type of foundation can take months, even years. However, white label partners have all of this at their disposal. This means a White Label Broker can focus on the activities that generate revenue and make profits such as branding, marketing, sales, and client service. This is how it’s possible to start an online brokerage firm in weeks when you use a white label solution.
Is a White Label Better than Becoming an Introducing Brokerage?
Starting a brokerage firm is one way to make money from forex and CFDs, but it’s not the only one. Start-ups can choose to become an introducing broker. An introducing broker solicits clients for a primary broker. They do this by building up a network of traders, investment advisors and money managers, and sending them to a specific broker. You can visit infinoxpartners.com for more information on being an Introducing Broker.
A white label broker is often a better solution because you have a greater stake in the action. As an introducing broker, you refer someone to a broker and that’s it. As a white label, you’re still selling another company’s brokerage service but you’re taking more of the upside. Your profits and losses are linked to the success of your clients. As an introducing broker, you basically get a flat fee. That does mean there is little risk, but it also means the potential profits are limited. Therefore, if you want more potential, white label partnerships are a better option.
What White Label Option is Most Suitable?
There are different white label options and the one that suits you the best will depend on the amount of control you want. Some options give you the power to customise, others offer an all-in-one solution. The main white label solutions are:
Franchise white label solutions bring IX Prime more to the fore than own-brand options. You become part of a large network of franchisees and use all the standard options offered by IX Prime. Basically, there is less customisation with this type of white label product. However, you still get access to liquidity service and Meta platform tools.
Own Brand White Label
You can choose to build your own brand on top of the IX Prime platform. This allows you to use custom branding and special offers designed solely for your brand. IX Prime essentially works silently in the background. That allows you to tweak and customise more of what IX Prime offers to suit your business.
Become a Full Brokerage
Using a white label solution can be a step towards creating your own full-service brokerage. Once you’re up and running with a successful white label, you can start investing in more custom products and solutions that allow you to go it alone. This isn’t the route most people take but it’s certainly possible to use white label solutions as a springboard to a full brokerage.
Easy to Secure Liquidity with a WL Solution from INFINOX and IX Prime
Starting a brokerage firm and offering FX and CFD trading doesn’t have to be as difficult as it once was. Before white label solutions became popular, only well-funded, experienced companies could become brokers. Today, white label partnerships make it easy for almost anyone to become a broker.
IX Prime gives you all the tools you need, including access to the best trading platforms in the world, MetaTrader 4 and MetaTrader 5. These tools ensure your clients get real-time price data, analytics and risk management options. Then, when you add to this IX Prime’s liquidity services, it’s easy to see why white labels are not only popular but an ideal way to start a brokerage with just a few resources.