What Is The Meaning Of White-label In Forex?

When you enter the forex trading market, you will come across the term ‘white-label broker’. Do you know what a white-label broker is? The term white-label is associated with a popular format where a company manufactures the goods or services, and another company sells it under its brand name. In forex, the white level is an affiliate program, where a solution and infrastructure provider transfers it on a paid basis to a new brokerage company. Visit MultiBank Group

What Are White-label Providers In Forex?

Therefore, in forex a solution and infrastructure provider is called a white-label provider. A white-label provider is actually a reputed and well-established brokerage company. It allows brokerage companies to enter the international currency market and their own brand name. The solution provider could be a developer or a simple agent who works as a go-between the developer and a broker.

Role of a White-label Provider

A white-label provider provides MT 4 and MT 5 server segments, necessary software, and a mechanism for conducting transactions.

They provide a reliable backup system.

A white-label provider deals with all technical infrastructures.

They give access and the opportunity to use trading platforms.

They provide relentless customer support on all issues.

They build excellent management systems.

They work on the usage of plugins and tools for client engagement.

They help in risk management, payment integration, liquidity management and many other things.

What is a White-label Broker?

A white-label broker is an established brokerage company; it pays the white-label providers to use its licenses and infrastructure. The white-label provider receives a commission against the service. For any technical problem or implementation of new solutions, the white-label broker needs to appeal to the white-label providers. There are many white-label forex brokers in the financial market. They usually do not use the tag ‘white-label’ with their name. That is why many traders do not recognize them. As a fact, many traders deal with a white-label broker without even knowing it.

How Do White-label Brokers Work?

To know more about white-label brokers you must know how they work. A white-label broker works in 3 particular ways namely A book, B book and mixed type.

A Book – The first one or A book is a type of execution of the client trades. Here the broker acts as a middleman who conducts the client’s transaction through a prime broker or a liquidity provider. The broker here earns a profit by levying the client’s commission or by increasing the spread. Hear the broker’s profit does not depend on the trader’s profit. That means he earns from the commission irrespective of the fact whether the trader has made a profit or not. Therefore, there is no conflict of interest between the trader and the broker.

B Book- It is another way of executing the client trades. Here the forex broker is himself a counterparty to the client. The broker executes the client trades by receiving real quotes from the banks and liquidity providers.

Mixed Or Hybrid Model- This type of execution is considered to be the most popular type of execution for average brokers. This hybrid model, as its name suggests, is a combination of the 2 models discussed before -A book and B book. Here the brokers can bring profitable clients to the real market and process their transactions internally at the same time. There are no serious deposit requirements in this hybrid model.

All the execution models discussed here have their own advantages and disadvantages. These things depend on the goals and objectives of the white-label broker. Usually, there are notable advantages of these execution models used by white-label brokers. The white-label brokers work smoothly with their clients and the white-label providers. Let us check out the advantages of white-label brokers.

Advantages Of White-label Brokers

There are several advantages of a white-label broker in forex. Some of them are listed below-

For a starting brokerage company, it is an easy and convenient option to get started from scratch. These broker companies can achieve a quick start in comparison to any other new broker company. A broker can spend a fair amount of money on acquiring licenses of MT 4 and MT 5 trading platforms, forex licenses, and technical infrastructure. But working with white-label providers they can all the solutions without investing the money. The provider provides all technical infrastructure and trading platform licenses. The broker here can save their money on these heavy initial investments.

Working with a white-label broker gives you the advantage of using all the latest technologies and flexible cooperation terms. A white-label broker can quickly and easily provide solutions to their clients. The broker does not waste time preparing for a new script or developing new software. There are turnkey solutions always available to use for them. The white-label providers offer a huge range of tools and services from which they can select whichever they like. There is also an option for customized solutions for a broker by the white-label provider.

You can build your own brand as a white-label broker. There is no need to mention the name of the white-label providers in your brand identity. With multiple features, you can earn goodwill as a broker in the forex industry. Know more MEX Group

There is no requirement for proprietary technical support. The broker can use the trading platforms, servers and system configuration without paying rent.

The Bottom Line

There are many types of brokerage companies in the forex currency market. White-label brokers are premium-class brokers who provide their clients with excellent technical support and risk management. In some countries, there are strict rules and regulations for brokers. There the broker must be careful in choosing white-label providers. Many security-related concerns are there, so for white-label brokers; different countries have different regulatory systems. If you are interested in forex trading or want to become a white-label broker yourself, you have to do thorough research.