Forex IB commission: structures, examples and red flags

What are the main forex IB commission structures?

There are six common forex IB commission structures, and each one creates a different incentive:

Most brokers publish a base schedule. Larger partners then negotiate above it, and the forex IB program guide covers how brokers usually tier those schedules.

How is forex IB commission calculated?

Forex IB commission is calculated from client volume, the spread or the broker's net revenue, depending on the model. The examples below are illustrative only. Their figures are hypothetical, chosen for easy arithmetic, and are not any real broker's rates.

Per-lot rebate

Take an IB whose clients trade 400 standard lots in a month, under an agreement that pays, for example, $5 per standard lot, so the IB earns 400 x $5 = $2,000 for the month. Rates can vary. If the rebate differs by instrument, say a lower rate on indices, you calculate each instrument separately and add them up.

Spread markup

Here the broker's base spread on a major pair is 1.0 pip and the IB's clients trade on 1.5 pips, so the extra 0.5 pip goes to the IB. On a pair where one pip on a standard lot is worth about $10, the IB earns roughly $5 per lot. The IB's clients pay this cost directly, which is why disclosure matters most with this model.

Revenue share

Now assume the broker's net revenue from an IB's clients is $8,000 in a month, after the costs the agreement defines, so at a share of, for example, 25%, the IB earns $2,000. The key question is how the agreement defines net revenue. Does it include swaps, commissions, bonuses, payment costs and client losses?

Multi-tier

In a two-tier deal, a sub-IB's clients trade 200 lots. The broker pays the sub-IB, for example, $4 per lot and pays the master IB an override of $1 per lot on the same volume. The sub-IB earns $800. The master IB earns $200 on top of its own clients' business.

Payment frequency and mechanics

Most programs pay IBs weekly or monthly. The mechanics vary by broker:

• Frequency: monthly is common for revenue share; per-lot rebates are sometimes paid weekly or even daily.
• Thresholds: many programs set a minimum payout amount and roll smaller balances forward.
• Methods: bank transfer, payment to a trading account or e-wallet, depending on the broker and the IB's location.
• Statements: a good program shows the calculation down to account and instrument level, so the IB can reconcile it.

What affects how much an IB earns?

Earnings vary widely. Five factors drive most of the difference in what IBs earn:

• Client volume and retention: a smaller group of long-term traders often earns more than a large group that leaves after a month.
• Instrument mix: rebates and margins differ between forex majors, minors, metals, indices and crypto CFDs.
• Account type: raw-spread and commission accounts usually pay a different rebate from standard accounts.
• Tier: many brokers raise rates as monthly volume or active client numbers grow.
• Quality rules: clawbacks for chargebacks, bonus abuse or wash trading reduce net earnings.

What must an IB disclose about its forex IB commission?

An IB should tell clients that the broker pays it, which model applies and whether their spread includes a markup, because every commission model creates an incentive of some kind. Per-lot rebates reward volume. Spread markups make the client's trading more expensive. However, revenue share based on net revenue can mean the IB earns more when the client loses. Regulators know this. Clients should know it too.

In many jurisdictions disclosure is also a legal duty: in the EU, for example, MiFID II Art 24(9) requires third-party payments to be clearly disclosed to the client. In the UK, the FCA's inducement rules in COBS 2.3A cover commissions paid to third parties, while COBS 22.5 sets how CFD promotions must describe risk. How to become an introducing broker covers the regulatory side.

What are the red flags in an IB commission offer?

Some offers should worry you. The biggest red flags are pay that looks too good to be true and terms you cannot verify:

• Rates far above the market with no clear explanation of how the broker can afford them.
• Pay tied to client deposits or losses only, with nothing for client retention or service.
• Vague definitions of net revenue, qualifying clients or attribution, because they leave room for disputes later.
• Unlimited clawbacks or the right to withhold payouts without stated reasons.
• Pressure to handle client funds, which an introducing broker by legal definition does not accept, or to trade for clients without the right permissions.
• An unregulated or unverifiable broker, which puts both the IB's income and its clients at risk.

For the broader context on how IBs fit into a broker's partner mix, see the introducing brokers guide, while brokers comparing forex IB commission with affiliate deals may also find forex affiliate marketing useful.

If you are a broker looking to reach traders beyond IB and affiliate channels, contact Memento about placement on comparison platforms where traders compare firms and decide.