IB Broker Guide: What Is an Introducing Broker-Dealer?
An introducing broker is a vitally important intermediary in the world of forex trading and CFD trading. What does an introducing broker do that's so valuable? They act as the bridge between retail traders and CFD brokerages, effectively acting as an affiliate broker or partner, referring prospective traders to brokers in exchange for a commission or rebate.
Within our guide to introducing brokers, we’ll explore what role they play in enhancing the experience of retail traders and their value to brokers within the trading ecosystem.
What is an IB Broker?
What is an introducing broker and why do they play an integral role in attracting and engaging the next generation of financial traders online? An introducing broker acts as an affiliate to the CFD brokerages, promoting their platforms and services and receiving commission for every new client account referred.
An introducing broker looks to keep potential brokerage clients engaged by publishing a host of resources and educational trading content, empowering users to act and open a client account to trade for the first time. Introducing brokers may cover the basics of CFD trading, including opening and managing open positions, as well as risk management. They may even offer market analysis to discuss potential trading angles inspired by technical and fundamental analysis.
In return, these affiliate brokers earn rebates linked closely to the trading activity of the clients they refer.
How IB Programs Work: Explaining IB Commission
IB broker commissions are generated through the three-way relationship between the CFD broker, the introducing broker and the retail traders referred. The introducing broker promotes the broker, the retail traders sign up and the introducing broker receives a cut of their trading activity. That's tracked via referral links or codes.
Forex introducing broker commissions or IB broker fees are typically paid out in terms of the volume of trades opened by referred traders or the specific instruments traded.
Example 1
- Let’s say an introducing broker gets a £10 rebate for every lot traded.
- Their referrals traded a combined 50 lots in a month.
- The introducing broker receives £500 (£10 x 50).
It’s also possible for CFD brokerages to operate tiered programs for IB rebate deals. For instance, introducing broker fees may rise as the collective trading volume of their referred clients continues to grow.
Example 2
- Imagine you’re an introducing broker being offered £10 per lot traded.
- You attract ten new clients in the last month, each of which trade at least ten lots, earning you $1,000 (£10 x 100 lots).
- The same broker also increases its rebate from £10 per lot to £15 per lot when your referred clients trade over 100 lots a month collectively.
- You can also earn rebates of £20 per lot when your referred clients trade over 500 lots a month.
Hopefully this demonstrates the potential for long-term growth, just by building up a base of engaged and enthusiastic referred clients.
In most cases, introducing brokers paid on a daily basis, but payouts can be more infrequent than this. The brokers running the leading introducing broker partnerships will submit monthly reports to their affiliate brokers, ensuring real-time transparency over the commissions generated.
Ultimately, it’s a win-win situation for all – introducing brokers make a steady return, brokers increase their active client base and retail traders get the benefit of trading wisdom and insight from the affiliate as well as their eventual brokerage.
Who Can Become an Introducing Broker-Dealer?
Becoming an introducing broker dealer might be easier than you think. IBs exist from all kinds of backgrounds and represent a wide range of individuals and organisations.
Essentially, anyone with a network of potential retail traders to engage with and educate can become an introducing broker-dealer. You don’t even need to have financial expertise or qualifications, although prior knowledge of how the forex market and CFD trading works is advantageous, not to mention marketing skills to promote partnered brokerages.
Below, we’ll explore the most popular categories of people that operate as broker-dealers in the forex industry right now:
Trading Gurus/Educators
Many introducing brokers are individuals who already trade the financial markets confidently and create content or training programs to educate others. If you’re a well-established trading guru, you’ll have the credibility and integrity to recommend users to open client accounts and earn rebates.
Money Managers
If you already manage investment funds on behalf of clients, you may be able to offer brokerage services to deliver enhanced value. You may not need to execute your clients’ trades, but you can still earn a rebate for encouraging them to invest through specific brokers.
EA (Expert Advisor) Vendors
If you’re a developer or reseller of automated trading software, you will likely have a ready made target demographic of users to introduce to a partnering broker. These users will already be heavily engaged with trading and some may still be searching for the most suitable trading broker for their needs.
Individuals with Extensive Networks
If you’ve cultivated a strong network of professionals or influencers within the trading industry, you can also leverage your contacts to promote an introducing broker program and earn rebates.
Why Choose TMGM As Your IB Partner?
If you’re looking for brokers to partner with and promote the opportunities in financial trading, why not try TMGM for size? We’re committed to offering best-in-class retail trading environments for all our clients:
Give your users access to 100+ instruments to trade
Anyone who you refer to TMGM will get access to more than hundreds of trading instruments, spanning seven different asset classes. Whether it’s major or exotic forex pairs, global indices or precious commodities, we’ve got them covered. Each instrument is traded via contracts for difference (CFDs), so your users don’t have to own the underlying asset to trade its market value.
Supplied by 7 top-tier liquidity providers
There’s no concerns over access to liquidity for TMGM clients, with seven top-tier liquidity providers ensuring there’s sufficient funds to go long or short on any available CFD.
Competitive rebate
We offer industry leading rebates based on the closed positions of your referred clients’ trades. There are no limits on the amount of commission you can earn per client and your rebates are paid on time, every time.
Receive 24/7 customer support
We value our IB broker community immensely, which is why we commit to offering 24/7 customer support, with each introducing broker assigned a dedicated Partnerships Manager for responsive and transparent communications from day one.
Access real-time reporting on your rebates
On the subject of transparency, all introducing brokers at TMGM also get access to our TMGM IB portal. Once logged in, you can track, monitor and grow your client base and receive the latest promotional material for our marketing campaigns to help attract more retail traders through the door.
We’re fully licensed and regulated
You can trust TMGM as a globally licensed CFD brokerage. We’re now licensed in Australia, Mauritius, Kenya and Vanuatu, demonstrating our commitment to trading excellence for all our clients.
Steps to Becoming an IB for TMGM
Think you’ve got what it takes to become a successful introducing broker? Follow the six simple steps to become a TMGM Partner
- Hit the ‘Sign Up’ button
- Complete the initial sign-up form
- Provide additional information to verify your account
- Open your live TMGM account
- Complete our simple questionnaire
- Verify your account by uploading any necessary documentation – and you’re all set!
As soon as your TMGM account is verified and active, you can start to use the TMGM IB portal to get together the necessary marketing collateral you need to promote our trading platform.
Join our 10,000-strong network of partners today and start to monetise your traffic by recommending our trading platform. We offer some of the highest rebate rates in the industry and with on-demand, fully transparent reporting, you’ll always know exactly where you stand.
The introducing broker vs clearing broker comparison is one novice traders ask a lot. Each type of broker serves specific purposes in the financial trading ecosystem: IBs introduce new clients to brokers and earn an IB rebate based on trading volumes. Meanwhile clearing brokers oversee the execution of trades on behalf of CFD clients, ensuring transactions are settled quickly and accurately. Clearing brokers also earn commission based on the volume of transactions cleared. In essence, both types of brokers complement one another to drive the financial trading market.
In most cases, introducing brokers will already have established relationships with referred clients. This means it's no big deal providing guidance and hand-holding for traders to manage and maintain their client accounts.
In most cases, CFD brokers will have their own proprietary tracking system, which robustly calculates the trades placed by referred clients daily. Each referred client will have a unique link attached to their account, with automated reporting on their trades via a digital dashboard.
We offer a string of partnership plans at TMGM, including opportunities for introducing brokers. All that’s required to become an IB with TMGM is to email [email protected] and liaise with an account manager who’ll guide you through the application process.
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