What is an introducing broker (IB)? How the model works
The referral business behind most retail forex brokers — what an IB does, how they are paid, and what makes the business last.
The short answer
An introducing broker (IB) is a person or firm that refers traders to a broker and is paid on what those traders do. The broker opens the accounts, holds the money and executes the trades; the IB brings the clients and keeps the relationship. Pay comes as a rebate per lot traded, a one-off CPA per qualified client, or a hybrid of the two.
- The broker holds the accounts, the money and the execution. The IB brings clients and looks after them.
- IBs are paid per lot (rebate), per qualified client (CPA), or both (hybrid) — and each plan rewards a different kind of audience.
- A sub-IB is an IB recruited by another IB; the recruiter earns an override on the sub-IB's clients.
- The durable IB businesses are built on trust that can be checked — an address they own, claims they can prove, and a risk warning in plain sight.
The short definition
Introducing broker (IB) — A person or firm that refers clients to a broker and is paid on the business those clients bring, without holding client money or executing trades themselves.
In the glossaryThe name describes the job precisely: the IB introduces. A trader meets the IB — through their channel, their classes, their community — and opens an account with the IB's broker through the IB's link or code. From that moment the broker does everything a broker does: it verifies the client, holds their deposit, executes their orders and reports to its regulator. The IB's part is everything before the account and much of what surrounds it: the audience, the education, the trust, and the answers when a client is confused at eleven at night.
In some jurisdictions the term is also a legal category. In the United States, for instance, an introducing broker is a registration type for futures business with the National Futures Association1 — someone who solicits or accepts orders but does not accept the client's money. In most of the retail forex and CFD world the word is used more loosely, for the referral partner of a broker. This article is about that second, commercial meaning; where you operate decides which rules apply to you.
Who does what
| The broker | The introducing broker | |
|---|---|---|
| Opens and verifies accounts | Yes | No — refers the client to do it |
| Holds client deposits | Yes | Never |
| Executes trades | Yes | No |
| Reports to a regulator | Yes, as a licensed entity | Depends on the jurisdiction |
| Finds and educates clients | Sometimes | Yes — this is the job |
| Keeps the day-to-day relationship | Support desk | Usually, in the client's language |
How an IB is paid
Broker partner programmes vary in detail but almost all of them are built from two pieces, and most offer a third that combines them.
| Plan | What is paid | Rewards | Watch for |
|---|---|---|---|
| Rebate | A fixed amount per standard lot your clients trade, for as long as they trade | An active, long-lived book | Minimum holding times, instrument groups paid at different rates |
| CPA | A one-off amount per client who meets qualifying conditions | Volume of new clients | Qualification rules: minimum deposit, lots, number of trades |
| Hybrid | Part of the CPA upfront, plus a reduced rebate | A book you expect to grow and keep | Both sets of conditions apply |
A rebate is paid per lot — one standard lot is 100,000 units of the base currency — and is usually tiered: the rate per lot climbs as monthly volume or active-client count passes set thresholds. A CPA (cost per acquisition) pays once for each client who qualifies, and the qualifying conditions are the whole story: a minimum first deposit, a minimum number of lots or trades, a minimum trade duration. A hybrid pays some of each, and so its rates on both halves sit below the pure plans.
The arithmetic of a book
The numbers below are illustrative — round figures to show the mechanics, not any broker's rates. Suppose an IB has 40 active clients, each trading 5 standard lots a month.
- a month: 40 clients × 5 lots
- 200 lots
- a month at an illustrative $5.50 per lot rebate
- $1,100
- once: 10 new qualifying clients × an illustrative $200 CPA
- $2,000
The rebate figure recurs for as long as those clients keep trading; the CPA figure is paid once and must be earned again next month with new clients. Which is worth more depends on how long your clients stay — the retention you can actually observe in your own book, not the one you hope for. For the three plans side by side over a year, see rebate, CPA or hybrid.
Sub-IBs: the second layer
A sub-IB is an introducing broker recruited by another IB. The sub-IB brings their own clients and is paid on them; the recruiting IB earns an override — a share on the sub-IB's clients' activity, paid by the broker, not taken out of the sub-IB's pay. Most programmes cap how many levels deep this goes.
A sub-IB network turns an IB from a publisher into a recruiter. The skill that matters changes accordingly: it is less about producing content and more about choosing partners whose audiences are real, engaged and not already committed to a competing broker — which is a measurement problem before it is a sales one. See how to read a trading audience honestly.
IB, affiliate, money manager: not the same thing
| Introducing broker | Affiliate | Money manager | |
|---|---|---|---|
| Relationship with the client | Ongoing — educates and supports | Usually ends at the click | Manages the client's capital |
| Typical pay | Rebate, CPA or hybrid | Mostly CPA | Performance and management fees |
| Touches client money | No | No | Yes, under a mandate |
| Licensing burden | Light to moderate, by jurisdiction | Light | Heavy |
Brokers themselves use these words inconsistently — some call every referral partner an affiliate, some reserve "IB" for rebate plans. The distinction that matters is the one in the last two rows: who touches money, and which licence that requires.
Before you sign a partner agreement
The partner agreement is the whole contract between an IB and the broker, and most disputes trace back to a clause that was not read. The questions below are worth answering in writing before the first client is referred.
- What exactly qualifies? For a rebate: which instruments, which account types, and whether trades closed within a minimum holding time are excluded. For a CPA: the minimum deposit, lots, number of trades and time window.
- How are tiers measured? Monthly or rolling, by lots or by active clients, and whether the higher of the two applies.
- When and how is it paid? Frequency, currency, minimum payout, and what happens to rebates on a client who leaves.
- What may you say? The broker's own rules on advertising, risk warnings and use of its name — they bind you as a partner.
- Which entity is the broker? Many brokers operate several licensed entities. Know which one your clients will join, and which regulator oversees it.
What makes an IB business last
The IBs whose books survive a bad quarter share a small number of habits. None of them is a growth hack.
- An address they own. A social account can be suspended, throttled or bought; a website on your own name cannot. See why an IB needs a website, not just a feed.
- Claims that can be checked. Results, testimonials and partnerships stated only where there is evidence behind them — see evidence before claims.
- The risk warning in plain sight, on every page that links to a broker.
- Their own language. For much of the Gulf, Levant and Iran that means Arabic or Persian first — see publishing right-to-left.
- A written partner agreement, read in full, with its qualification rules understood before the first client is referred.
Questions
Is an introducing broker the same as a forex broker?
How do introducing brokers make money?
Do I need a licence to be an introducing broker?
What is the difference between an IB and a sub-IB?
Sources
- Introducing Broker (IB) — Who has to register — National Futures Association
Terms in this article
Gravity Editorial
Written by the people who build Gravity, from what the product does and what building it taught us. Figures come from Gravity's own measurements or from the source cited beside them; nothing on these pages is trading advice. See how we write.
Related in the Journal
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