The main prerequisite for trading currencies is to find a forex broker because only they provide a trading platform to carry out trading. The broker you choose will be responsible for helping you trade by offering the required technological infrastructure and real-time price quotes along with the execution of the orders that you place. But do all brokers actively manage all these processes? Or are you relying on a 3rd party while using a brokerage platform? This is what happens when you trade with a white label forex broker, and the purpose of this blog is to educate you about some important things you need to know about white label brokers.
What does White Labelling mean in Forex?
Let’s start by understanding the meaning of white labelling in forex. In the forex market, there are a good number of brokers, and new brokers are also entering the online brokerage industry due to the business potential it offers. However, these new businesses may not have enough funds, resources or expertise to build their brokerage platform from scratch. It is a complex procedure with all the legal and regulatory formalities. The broker should also ensure their clients’ deep liquidity to provide solid trading conditions. The technological processes involved in setting up and launching a brokerage are also costly and time-consuming.
Hence, these new brokers partner up with top-tier forex brokers who share their technological infrastructure, liquidity arrangements, and more with the aspiring broker, allowing them to enter the market easily. This partnership is known as forex white labelling, and a new broker choosing a white label package of an established broker for launching their platform is known as a white label forex broker. They get to kick start their business with a lower amount of capital and within less time. They also get ongoing support from the primary broker for platform maintenance and other back-office operations.
The trading experience that you get on a white label broker platform is not going to be any different from the experience you get on a top-tier broker platform. You are interacting with the same technology; the only difference is the brand name. The white label provider allows the white label broker to re-brand and customise the platform. The key purpose of white labelling is to build their brand name while leaving all other technical and complex processes to an experienced broker.
Is white labelling Legal and Legit?
Forex white labelling is a legal and legit practice in general as long as there is transparency about the services, pricing, and other aspects. The white label broker will pay the platform maintenance fee to the white label provider regularly, and there is also an initial setup cost that must be paid before the platform launch. The white label broker will be dependent on the white label provider for all operations that are essential for running the brokerage. Hence, traders must check if their broker uses white label solutions.
It is hard to tell if a broker is using white label platforms or not, as the brand name of the white label provider may not be added to their website. The trading platforms will be very similar in functioning. Still, with all the customisation and re-branding, a trader may not be able to see any noticeable difference between an independent broker platform and white label broker platform. Most forex white label providers offer MT4 integration to their partners, and some brokers also provide MT5 and other platforms along with branded mobile applications.
The type of accounts offered, mode of trade execution, feature and trading tools, etc., will be the same as those of the white label provider. Hence, brokers who want to offer different types of accounts as options will have to find a suitable white label provider for that. If someone wants to offer swap-free accounts to provide halal trading conditions for Muslim clients, they will have to find an Islamic broker as their white label provider.
The business registration process and regulatory formalities will be the same for a regular broker and white label broker. However, a white-label provider’s support makes things easier for a new broker. The regulatory formalities will depend on the jurisdiction in which the white label broker wants to operate. If you sign up with a regulated broker, you will get a secure trading experience whether they function with white labelling.
Benefits of choosing a white-label broker
One of the major benefits that you get by choosing a white label broker is that you get to trade with top-notch technology and get access to a deep liquidity pool if a top-tier broker supports them. The white label brokers are new to the forex world, so they will be focused on building their brand name more than anything else. They will do their best with promotional programs for client acquisition, and you can take advantage of these promotional schemes while signing up with them.
You won’t have to worry about technical issues while using their platform as the white label provider will be in charge of fixing all these issues, and they often share their customer support systems with the white label broker, which makes the process faster and more efficient. The new broker may not have enough experience handling these issues, but since another experienced broker supports them, you can trust them with your funds.
As I said before, the trading experience you get on a white label broker platform will be identical to the trading experience that you get while trading with a top broker. Since the white label broker gets to cut down on cost, they will try to offer competitive trading conditions for building a loyal client base. As a trader, you will get quality services at a lower price with tight spreads and low commissions, which allows you to minimise your trading costs.
Drawbacks of choosing a white-label broker
The first drawback of choosing a white label broker over an independent broker is that you will depend on the other broker’s technology and systems, and any issue on their platform will affect you as well. The white label broker will not be handling the technical processes, which can be a concern for many traders as they will be relying on a 3rd party. But in most cases, you won’t even get to know about this as white label providers operate in the background, and as a trader, you will still get quick solutions to any issues that arise during the trading process.
Another demerit of trading with a white label broker is that you may not get as many options and features on their platform if their white label provider is not updating the platform with the latest tools and functions. Hence, it would be wise to open a demo account first and go live after you are satisfied with the platform’s functionality and tools. But if the broker has chosen a top broker for white labelling, they can offer their clients all the standard and advanced tools with the turnkey solution.
Another issue you may face with white label brokers is a lack of transparency about their services, and they don’t have much control over the trading process. Things like payment processing, CRM solutions and customer support may also be outsourced to the white label provider. This can lead to delayed responses when a large number of clients are trying to reach out to customer support. But if the white label solutions offer scalability, you will not face any such issues.
How does the white labelling system help a broker?
From the perspective of an aspiring forex broker, setting up a platform on their own is a complex and challenging task with heavy capital requirements. The process can take months or even years to complete, and it is hard to attain perfection when you are a beginner with no prior experience or expertise in brokerage services. But they won’t have to give up on their business plan. White labelling can be a feasible alternative that saves their time and money while minimising the business risk and maximising the profit potential.
The forex white labelling system is a simple and steadfast method to enter the forex brokerage industry with the support of an established broker, which improves their chances of success as a new broker. It is not just about the technological infrastructure but also about the safety of operating under the umbrella of a well-known broker that you can rely on for a long time. The new broker gets enough time to focus on building their brand name and devising promotional plans while an expert manages the technical processes.
Should I trade with a white-label broker?
Trading on a white label brokerage platform is as safe as trading with a well-known broker. In fact, many of the top brokers we see today were also dependent on white label solutions in the past, and they were able to grow as independent brokers by building a loyal client base over the years. Many of us may already be using white label technology and trading with white label brokers without realising it.
Hence, you should ensure that a broker is reliable and reach out to them to clear any doubts you have about their services. Always test their demo account first and do your research before going live. Trading with white label brokers can offer you a superior trading experience at a lower cost, making them a worthy option for many.
