Айби Форекс Финанс

What Is an Introducing Broker?

An introducing broker (IB) is a professional adviser in the futures markets who has a direct relationship with a client but delegates trade executions, typically to a futures commission merchant (FCM).

The introducing broker may be employed by a company that is a partner of the commission merchant's firm or a direct subsidiary of it.

Role and Responsibilities of an Introducing Broker (IB)

An introducing broker acts as a middleman, matching an individual or a company seeking access to the futures markets with a futures commission merchant who will take on the responsibilities of making the trade and handling the back-office operations.

Generally speaking, IBs make recommendations while the commission merchant executes the trade. The introducing broker and the broker who executes the transaction split the fees and commissions.

Introducing brokers play the same role in the futures markets as stock brokers do in the equities markets. However, they are regulated by different authorities. Stock brokers are registered with the Securities and Exchange Commission (SEC) and are regulated by the Financial Industry Regulatory Authority (FINRA). Futures introducing brokers are registered with the Commodity Futures Trading Commission (CFTC) and regulated by the National Futures Association (NFA).

This arrangement allows for specialization, with the IB focusing on the client while the FCM focuses on trading floor operations.

Today's FCMs provide trading platforms on which clients can place trades online and take responsibility for account management. However, it would not be financially feasible for an FCM to open storefronts across the country to serve their customers. IBs can provide that local service.

The Relationship Between IBs and FCMs

Many IBs are one-person operations, though some are larger, multi-location businesses. In any case, their primary goal is customer service. Outsourcing the prospecting and servicing of clients to the IBs creates economies of scale for FCMs and the futures industry.

Most IBs prefer to outsource trading because it frees them of the substantial overhead involved in executing trades, maintaining accounts, and handling financial reporting responsibilities.

IBs allow FCMs to do business on a local basis while using the FCM's infrastructure for trading.

The Bottom Line

The introducing broker is best understood as the equivalent of a stockbroker in the futures market. A stockbroker maintains a relationship with clients and may recommend investment strategies or specific investments to their clients over time. They, like introducing brokers, are usually the middlemen. A trader on the floor actually executes orders for the clients. In the futures markets, that is the futures commission merchant or FCM.

An introducing broker, or IB, is a company or individual that introduces its clients to a forex or CFD broker.

to affiliates but IB

n introducing broker (IB) is, wha

Introducing brokers - also called IBs for short - are individuals or companies who act as an agent between the broker and the client.

The introducing broker traditionally refers new traders to their preferred broker and will earn commissions from this activity. The commission is paid by the broker from the commission/spread they earn from each trade.

IBs typically offer a specific service and tend to maintain a long-term relationship with their clients. The type of service they provide varies, but it can be anything from providing educational courses to 1-to-1 live training and cashback sites.

It is in the best interest of the IB that the client is profitable and continues trading as long as possible.

Introducing broker vs affiliates

Affiliates and IBs share a common activity - they introduce clients to a specific broker and get remunerated for this.

The main differences between affiliates and IBs are the way they generate referrals, and how they get paid by the broker.

Introducing brokers:

IBs will generally earn rebates - a share of the commission or the spread the brokers charge the client. The benefit is that the IB starts earning money from having made the referral from day one - there is no need to wait for the client to meet specific requirements. Rebates are generally paid out once per day, unlike CPA, where payments tend to occur once per month, for the previous month's activity.

Another benefit IBs enjoy is that they are not limited to how much they can earn, and during what timeframe.

IBs tend to have direct contact with their clients and offer specific services, while affiliates might simply promote the broker on their website, without offering any service to them.

An example of this is a comparison website that lists various brokers on its site. If the client follows the link of the comparison site, opens a trading account, funds it, and trades on it – the comparison website might earn a commission from this without knowing the client or having any interaction with them.

Affiliates:

Affiliates are generally on a CPA (cost per acquisition) payment plan. They will receive a fixed fee for introducing a client, as soon as the client meets the requirements set by the broker.

For example, an affiliate may earn $ CPA when the client they’ve introduced has deposited at least $ and traded 2 standard lots within a day period.

How to become an introducing broker?

First of all, new IBs need to have a strategy in place on how to attract clients. For example, if they want to educate new traders on how to become successful, they might have to structure an online course or webinar or even provide one-to-one training. Most likely, they will need a website and some social media presence.

The next step would be to choose a credible broker. The majority of clients prefer to trade with a regulated broker. Hence, introducing brokers should select a broker with a great reputation who is regulated in at least one reputable jurisdiction (such as FCA, ASIC or SVG).

Every broker will ask new IBs for some documents to prove their identity. This might be a passport, driver's license, or identity card. When applying to become an IB as a company, you might need to provide the appropriate documentation for that, such as a certificate of incorporation and a bank statement in the company's name.

Once there is a deal in place, new introducing brokers can start promoting their services and focusing on growing a client base, and maintaining those same clients. The more they trade, the more they earn – hence, it should be a top priority to look out for the client's best interest.

Benefits of the Axi Introducing Broker programme

Discover the benefits of becoming an introducing broker with Axi:

• Cutting-edge tech powerful trading tools and a world-class platform
• Ultra-competitive spreads, fast and secure payments, and low trading costs
• Trusted, regulated, and licensed broker with 60,+ customers
• Free education materials including videos, eBooks, and tutorials
• 24/5 local support covering everything from registration to placing trades

Who can become an IB?

Almost any individual or company can become an IB! There are regulatory restrictions in particular countries, so it’s important to check if the country you are based in allows traders to become IB without authorisation. If there is no need to fulfill any regulatory requirements, then only the appropriate KYC documents are needed, a broker to partner with, and a good strategy!

How to select the best introducing broker programme?

The main priority should be to ensure that new introducing brokers are dealing with reputable and regulated brokers. This will ensure that the clients who sign up are treated fairly and that the IB payments are paid on time and correctly.

Most brokers will offer an entry-level commission plan. For new introducing brokers that don't have a client base or only a small one, they may need to start on that plan. Experienced IBs with valuable business can always contact the broker and enquire about a custom plan.

IBs should test out the broker they are looking to work with by opening a live account themselves and actively using it.

Is the account opening process easy and fast?

Is customer support reliable?

How is the execution speed?

These are all questions the clients will want to know, and IBs should make sure they are sending them to a broker that provides quality services and support to its clients.

Fill out this form to learn more about the Axi introducing broker programme.

Tips for new introducing brokers (IBs)

If you are going to become an IB then these tips should help on your new journey:

• Have realistic expectations – a serious business is not built overnight, and it will take time to build a client base. 
• Choose a reputable broker – providing clients with great service will only go so far if they have a bad experience with the broker that has been recommended. While errors and mistakes can happen with every broker, reputable and regulated brokers will always treat their clients fairly. 
• Invest in retention – Introducing brokers who want to bring new clients in, and that is understandable. However, once they have built a decent client base, they should also invest time into keeping the existing clients happy as they could continue generating revenue for them over a long period of time.

Ready to trade your edge?

Join thousands of traders and trade CFDs on forex, shares, indices, commodities, and cryptocurrencies!

This information is not to be construed as a recommendation; or an offer to buy or sell; or the solicitation of an offer to buy or sell any security, financial product, or instrument; or to participate in any trading strategy. It has been prepared without taking your objectives, financial situation, or needs into account. Any references to past performance and forecasts are not reliable indicators of future results. Axi makes no representation and assumes no liability regarding the accuracy and completeness of the content in this publication. Readers should seek their own advice.

Milan Cutkovic

The promotion runs from to

The organizer and sponsor of the promotion is LiteFinance Global LLC. 

The prizes of Annual IB contest are:

1st prize: Honda SH i Motorbike (or $12, real money into LiteFinance account)

2nd prize: one-week trip to European country for two (or $6, real money into LiteFinance account)

3d prize: one-week trip to South Korea for two (or $2, real money into LiteFinance account)

Special prize: Car Vinfast Fadil (or $20, in cash)

Only registered LiteFinance partners from Vietnam can taking part in Annual IB contest.

No special registration for participating in the contest is needed. LiteFinance’s registered partners from Vietnam take part in the contest automatically.  

First four participants with the largest amounts of points will be recognized as winners based on their ranking at the end of the contest.

Partners get points which raise them in rating. 

Participants get points according to the following algorithm:

1 point = 1 lot traded by referrals 
10 points = for each activated referral* 

*Activated referral is a client who makes a deposit of at least $ and has 1 lot traded while being registered under a partner. 

      Only the deposits and trading results of direct partner's referrals are taken into consideration while calculating the points.

      A participant is added to the rating after receiving one or more points. The contest rating is updated every hour.

       When calculating the total volume of referrals' it must be noted that :

• The volume of trades in CFDs on shares, oil, cryptocurrencies and stock indexes is multiplied by ;
• The volume is times more for Cent accounts.
• When adding the bonus funds to the account balance, only the trades conducted by use of the Client’s own funds will be considered (with deduction of credit funds).

      When calculating the total volume of referrals' closed transactions, we do not consider:

• deleted and cancelled pending orders;
• trades contradicting item of the "Client Agreement";
• artificial trades (locked positions);
• transactions resulting in less than 30 points of profit/loss.
• trades conducted in the account before a receipt of bonus funds;
• trades are taken into consideration for transferring another bonus to balance.

There are basic conditions participants must meet to get a prize.

      1st, 2nd, and 3d prizes will be given only to LiteFinance’s partners from Vietnam that will attract at least 15 activated referrals and get at least points during the contest period.

      A special prize will be given only to LiteFinance’s partner from Vietnam that will attract at least activated referrals and get at least points during the contest period.

      If a participant on the leading place in the rating has not met the conditions at the end of the contest, the special price will not be given.

      If not one participant has met the basic conditions for getting 1st, 2nd or 3d prize, then the contest will be considered invalid.

 Prizes will be given only if at least points are issued among all the participants during the contest period. 

Points are distributed from the first till the last day of the contest period.

In case a few participants have the same amount of points, then the higher place will be awarded to the participant with the largest amount of activated referrals attracted during the contest period.

The partners with deposits from referral accounts in which no trading activity has been registered during the Annual IB promotion cannot claim a prize.

Only partners with fully verified profiles can be recognized as winners. The organizer has the right to request any additional information regarding the participant’s identity.

The Organizer has the right to deny a prize to a participant with no reason given if there is a suspicion of rules violation or if a winner has refused to verify his/her profile and provide additional information regarding his/her identity.

The company’s representatives and staff, as well as their relatives, are not allowed to participate in the promotion.

Any claims arising in connection with this contest shall be examined according to this terms and the provisions of LiteFinance’s  Affiliate Agreement. Any situation which is not mentioned in the company’s regulatory documents shall be sorted out by means of negotiations between the parties. A final decision shall be made by the organizer of the contest - LiteFinance - and shall not be subject to any revisions.

By participating in the promotion, a participant fully accepts its conditions and rules.

LiteFinance has the right to amend the promotion terms at any time without notice.

LiteFinance reserves the right to use the information related to the winning accounts for advertising purposes and publish it in any sources of information. The winners are invited to participate in LiteFinance’s advertising and marketing events, such as interviews, photo- and video-reports, and press releases concerning the contest. At the same time, LiteFinance undertakes not to divulge a winner’s private information (including name and surname) without his/her consent. Should a winner refuse to participate in such events, LiteFinance Global LCC reserves the right to change the list of winners.