Introducing brokers, or IB, programs are an essential part of today’s economy and are responsible for much of the traffic companies receives. But what exactly is an Introducing Broker and how do they receive compensation for what they do?
Q: What is an Introducing Broker?
A: An Introducing Broker is someone, or some group, around the world that introduces new traders to an exchange. Another name for it is an Affiliate.
Introducing Brokers are generally influencers with their own social media channels, a domain of expertise, existing follower base, and/or distribution channels. They aim to introduce, provide information, and/or otherwise analyze an exchange to convince new users to register and trade on an exchange.
Q: What is an Introducing Broker Commission?
A: An Introducing Broker Commission refers to the commission, or rebate, the Affiliate receives due to any activity or trade that is brought to the company due to the Affiliate. Commissions are generally calculated as a percentage on profit or trading volume and may be subject to a sliding rule of percentages.
As an example, every time an Affiliate’s referred users trade $1,000,000 worth of contracts and the commission is set at 0.010% on volume, the Affiliate would receive $100.
Q: What is the best affiliate commission for cryptocurrency?
A: Commissions can be calculated on profit as BitMEX and OKEx do, or on volume like Bybit does.
Commissions on profit are calculated as a percentage of the profit made by the company. These profits are dependent on the makers’ trading volume minus the takers’ trading volume; meaning that the Affiliate receives commissions only on parts of the trading volume brought about by its referred users. To note, under this system an Affiliate could not receive any commission should the referred users provide more maker trading volume than taker trading volume.
Commissions on volume are calculated as a percentage of the makers trading volume only; meaning that the Affiliate receives commissions on all of the trading volume brought about by its referred users. This is by far the most profitable Affiliate Commission system in the cryptocurrency industry.
Q: What is an Introducing Broker Agreement?
A: An introducing broker agreement, or services agreement, refers to the legal contract defining the terms and conditions under which the Affiliate may receive payment from the company for the traffic and activity said Affiliate contributed to.
The contract is meant to protect both the company and the Affiliate from damages, misconducts, mispayments, and any other fraudulent behavior that may arise from their cooperation, but also underline under which conditions said cooperation is applicable and what each party is allowed to do, say, or act upon.
This concludes today’s articles about Introducing Broker commissions and service agreement. We hope you enjoyed the read, learned a lot in today, and stay tuned for more great content.