White Label or Brokerage?

White Label or Brokerage?

by fscala

“How do I get a white label?” is a question we are often asked at Tripeak.  Because we are a technology provider and not a brokerage, a white label in the purest sense is not one of our product offerings.  What Tripeak does offer, however, is something more extensive than a white label, namely the tools and support required to establish an entire FX brokerage.  The discussion of white labels often leads to a question along the same vein as the first, “does is make more sense to get a white label or start my own brokerage?”  In many cases those who inquire about a white label aren’t aware of the reasons it might make more sense to start a brokerage.  A few, but not all, of the reasons to consider running your own FX business are found below:

It’s Your Business – One of the best reasons to operate your own brokerage turns out to be the simplest–you own the entire business.  As the brokerage grows you are building equity in a company which you can later sell, something not possible with a white label.  Remember a white label is simply an extension of an already established brokerage, not an independent entity.

More Control – White label owners do not have the liberty to fully customize their business as they would like to see it.  At any point in time the brokerage they’ve partnered with can make a change in policy that the white label owner has little, if any influence over.  These changes can range from small items such as the availability of specific order types all the way to major product features such as spreads or a clients’ leverage options.  Furthermore, operating your own brokerage offers you an open landscape to creatively position your business from the competition.  In a market that is still quite young in comparison to more established products, there is still plenty of room for innovation.

Unlimited Sub White Labels – Given the two points above it is always better to be the broker offering the white label than the recipient of one.  The sky’s the limit in terms of growth when a broker can offer a potentially unlimited number of white labels and sub-white labels to its affiliates.

No Conflict of Interest – In many cases the broker offering the white label serves as direct competition with its white label customers.  This could be in the form of better pricing, wider range of products, or a package that is simply more competitive.  Independent brokers need not have this concern as they do not have any ties to a specific broker.

Greater Revenue Opportunity – Newly formed brokerages faces two challenges: acquiring clients and developing a marketing strategy.  These obstacles are no different for the owner of a white label, but the potential revenue opportunitiesare reduced because the partner brokerage must receive a share of the revenue.  An independent brokerage, on the other hand, has the freedom to charge its clients as much or as little as it likes, offer as many products and services as it wishes, and pursue whatever strategy it feels will provide the best return on its investment.  If a white label owner is successful at acquiring clients, then the greatest challenge has already been overcome and it only makes sense to pursue the avenue that generates the most revenue.


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