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

April 29, 2016

white label program IBs partnership

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?

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.

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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