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An introducing broker refers to any individual or company that directs people and to a brokerage or trading company and gets rewarded for it. They act as a link between would-be investors/traders and the trading brokerage.
Ideally, there are no special qualifications required to become an introducing broker. You only need to know how to attract customers by advertising or offering trade-related services like wealth management or trader education. After this, you can direct these clients to your IB partner brokerage.
Therefore, anyone can become an introducing broker. You only need to find a broker to find the best introducing broker program, register an account, and use the referral link provided to direct clients to the broker.
Introducing broker history
Traditionally, introducing brokers were also referred to as commodity brokers or futures brokers as they operated within the more complex commodities and futures markets. Today, however, virtually all brokers have launched an IB program that welcomes introducers for every supported trade instrument – including cryptocurrencies.
In this guide, we look at the different roles of introducing brokers before looking at the top five introducing broker programs of 2021:
What does an introducing broker do?
- Solicit business on behalf of the broker: The primary role of an introducing broker is to solicit customers on behalf of their clients. Traditionally, IBs would advertise their services. Today, however, they have integrated IB into other crypto trading services.
- Bridge between clients and the brokerage: Introducing brokers act as the bridge between a trader and the brokerage. In most cases, IBs don’t just sell the brokerage but also orient the would-be clients on the nature of the platform – on behalf of the broker.
- May provide trader education: Some Introducing Brokers land clients while offering free or paid trading education to newbies and intermediate traders. They then direct these clients to start trading on brokerages where they act as introducing brokers.
- Offer wealth management lessons: Other introducing brokers organize wealth management lessons through websites, blogs, vlogs, or physical seminars. Here they teach about trading and the direct persons who wish to start trading to brokerages where they serve as IBs.
- Negotiate trading fees and commissions: Most brokerages will be more than happy to customize trading fees and commissions for high net worth clients and high volume traders. The newbie but high net worth investor may at times tap on the IB to negotiate better trading fees or commissions on their behalf.
Best introducing broker programs
The introducing broker concept has since moved from the futures and commodity markets. Today, almost all online brokers run an introducing broker program that targets new clients for all their trading instruments, from forex to cryptocurrencies. However, the features of these IB programs and the reward scheme vary from one broker to another. From the above list, you will realize that FBS runs a commission-only reward scheme, Libertex offers both commission and CAP plan reward options, eToro offers a CAP plan reward by default. Consider these and the IB program features offered by different brokers when deciding on the best IB program for you.
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