What is a White Label?
A White Label forex platform enables a trading firm to put its logo and branding on a platform that was created by a technology firm. To the end customer, the white label product appears as though it has been manufactured by the trading firm itself. In other words, a trading firm can buy a trading platform from another company, label it with its own brand, and operate and offer it to their customers. The benefit for both firms is that the technology firm can concentrate on making and upgrading the product or service, and the trading firm can focus on marketing and selling the product.
The advantages of a trading firm operating a foreign exchange white label business:
- Increases product offering to their customers
- Gives a turnkey trading solution to their clients
- Increases potential revenue streams
- Maintains control and transparency over the infrastructure through which you manage your clients
- Increases brand awareness of their foreign exchange business
- Enables access to cutting-edge trading technology—without the time or investment to create it in-house
How does the foreign exchange white label business operate?
A trading firm would operate a white label business in the same way as its regular foreign exchange brokerage business. Traders can have their own service websites and trading platforms, they can set the platforms’ trading spreads and commissions, and they handle customer accounts, such as set up, withdrawals and deposits. They manage the client-facing activities, while leaving the tech support and development of the well-functioning online forex trading platform to the experts.
Partial white label versus full white label
In a partial white label, the tech provider delivers a service to the trading firm, but does not provide regulatory registration. The full white label provides trading firms with regulatory registration, the platform, and a stable quote systems (such as online quotes for gold trading, foreign exchange, crude oil, indices, and stocks) and market channels. As for the software, it also provides training in departments such as back-office, customer service, and market development, as well as daily workflows of regular traders.
In either instance, the trading platform can be branded with the trading firm’s logo. The main difference is that the full white label can directly manage the client’s funds, while the partial white label cannot receive the client’s funds. Rather, it needs to be transferred to the broker who provides the white label service.
From a functions perspective, there is basically no difference between partial and full white label platforms, though various white label providers may provide different features based on their own conditions, such as liquidity, CRM system, order processing, and so on.
In addition, the full white label business can also configure the spreads and commissions of customer transactions, handle the opening of customer accounts, and have secure third-party payment channels for customers to deposit or withdraw.
How do trading firms profit from White Labels?
There are three main ways to make profits in the foreign exchange white label business—the same as for traders with their own platforms. One is to set a spread markup on your existing aggregated liquidity to make a profit, the second is to earn profits by collecting trading commissions, and the third is to become the counterparty of the customer, trading in the opposite direction from the customer. Therefore, revenue is mainly based on customer transaction volume. The higher the customer transaction volume is, the higher the revenue the white label can obtain. Brokers that provide white label services often offer a variety of different revenue options to their end clients.
The Fortex White Label trading platform
Fortex offers a comprehensive white label trading system for brokers, regional banks, and other financial institutions. The turnkey solution allows institutions to aggregate, manage, and distribute pricing out to their existing client base—while risk-managing client flow in multiple ways. Key features include:
- Aggregation of bank and non-bank liquidity
- Smart Order Routing
- Pricing Engine for creation of multiple liquidity streams and tiers with full ability to markup quotes on a per-client level
- Distribution via branded, customizable GUIs for institutional, corporate, and retail clients as well as via FIX API
- Risk Management tools to ensure client credit limits are enforced
To learn more about Fortex’s White Labels for brokers, or our FX solutions, liquidity aggregation, full eFX suite for regional banks, ECN matching engine, and more, please contact [email protected].