White labels and prime labels can serve as a criterion when we choose a Forex platform because the safety coefficient of their funds is different. Many people have a vague understanding of the concepts of white labels and prime labels. This article will mainly share what white labels are, what prime labels are, the differences between white labels and prime labels, and which type of platform has a higher safety coefficient.
1. What is a White Label?
A white label refers to a trading broker providing IT services to another company that wants to become a broker, allowing it to have its own logo and offer quotes to customers under its own brand, thereby becoming a broker.
In simpler terms, a white label is a subordinate platform affiliated with a prime label broker, somewhat akin to private labeling.
For example, if you are a food manufacturer with your own brand, production workshop, and the corresponding regulatory documents all in order, you could produce multiple varieties under your brand. You could be considered a prime label. If a sales merchant wants to have their own brand but lacks the qualifications for production, they might turn to you to produce goods under their branding. They don’t have warehouses, production bases, flavor formulations, or regulatory licenses—all would depend on you! They would then be considered a white label.
2. What is a Prime Label?
Unlike a white label, a prime label represents the mainstream Forex platforms in the foreign exchange market. A prime label owns a complete trading system, full permissions of MT4, and can engage in secondary development to add risk management plugins and a matching settlement backend. Prime label platforms have their own independent servers and liquidity providers, free from any restrictions.
Prime label platforms are regulated by government authorities, adhere to proper financial surveillance, and require higher operational costs, making them suitable for Forex traders with extensive experience and substantial capital.
3. Types of White Labels
Full White Label: A full white label provides regulatory registration, platforms, a stable quote system, and market access. Regardless of the size of the regulation, a full white label is under some government supervision, possibly provided by the prime label broker in charge of regulatory affairs or by a third party specializing in license processing. Full white labels have authentic MT4 or MT5 licensing, ensuring software stability. Full white labels are connected with liquidity providers, which can be shared with the prime label or independently integrated. However, due to the costs associated with connecting to full white labels being close to those of running a prime label company, most choose to directly operate as a prime label.
Semi White Label: A semi white label only provides brand identity and doesn’t offer regulatory registration services. Semi white labels receive authentic MT4/MT5 licensing from MetaQuotes but lack regulation, meaning they have no permission to conduct Forex trading, nor do they connect to liquidity, making them purely market maker platforms with higher risks. Lacking regulation and the associated potential risks often lead to them disappearing. Setting up a platform is relatively easy; some set up semi-prime labels just to vanish, so be cautious in your choices.
Limited White Label: A limited white label refers to a customized Forex platform. While their clients open accounts with the limited white label operation, all clearing of funds is handled by the white label provider. Limited white labels also don't connect to liquidity providers, operating on a market maker model and betting against their clients, which carries great risks.
Differences Between Prime and White Labels
Prime label platforms are properly regulated, have Forex liquidity qualifications, and maintain segregated accounts, ensuring client fund safety.
White label platforms generally lack regulation, don’t have Forex liquidity qualifications, and don’t maintain segregated accounts, posing significant safety risks to client funds!
Why Do Prime Label Companies Not Offer Asset Management While Many White Label Companies Do?
Firstly, what is asset management? Simply put, it involves entrusting accounts or funds to a company or platform. The company or platform provides strategies, meaning ways to make money.
Internationally, mainstream regulatory bodies specifically prohibit platforms from offering strategies. Why? Because prime label companies have market maker qualifications, allowing them to bet against clients! What does betting against clients mean? Essentially, since 85% of people trading Forex suffer losses, losing to the market is the same as losing to the platform. Thus, considering probabilities, the platform dares to bet against you! So, if you take a long position, they will simultaneously take a short position at the corresponding price level. This means if you make money, they lose money, and if you lose money, the platform profits! This presents a problem—if they provide you with a method to make money while betting against you, they would obviously incur losses. Would a platform do something so foolish?
Not at all! Because a platform owns a complete trading system, has full permissions of MT4, and can engage in secondary development to add risk management plugins and a matching settlement backend, it has room for maneuver. Since you wouldn't notice any inconsistencies, you'd only know that your money comes from the Forex market, not realizing it's actually the platform's loss. Therefore, once the entrusted clients reach a certain volume of deposits, the platform might manipulate the backend to blow up your account, leading to all your money being lost to the platform, and you being eliminated from the game.
Hence, mainstream international regulators prohibit platforms from providing clients with strategies! They enforce strict regulations. Once discovered, the entities will be permanently banned from the Forex industry and added to an industry blacklist.
How Do White Label Companies Operate?
Given this model, many white label companies have emerged in the market, explicitly to disappear after dealing directly with clients, offering strategies, and betting against them. The funds you make are essentially from others’ capital. Due to the low level of Forex awareness and discernment among the domestic population and the preconceived notions that the first company they deal with is the industry benchmark, awakening them is a challenge. Additionally, platform promotions and training further entrap individuals!
Thus, many scam companies, taking advantage of this point and aggressively expanding through inferior direct selling models, continuously circle money. Once a certain threshold is reached, a blowout or a soft landing occurs.
Events of blowouts include IGO, Volcker, Mitigation, etc. Soft landing examples involve explaining delays in withdrawals due to national policy impacts or other reasons, spanning from a few days to several months, followed by further delays justified by new reasons, continuing until people forget about it. Or due to a hacker attack requiring a platform transfer for continuing operations, unblocking frozen funds, etc., endlessly offering enticing hope for more deposits but never yielding results. Until one either forgets or is awakened by others, by which time it’s often too late!
Thus, investors suffer silently, and without adequate legal protection for domestic investors, most attempts to seek redress end unresolved. This leads individuals who have been fooled to associate Forex with pyramid schemes!
Therefore, if a platform claims to provide strategies, please be extremely cautious! Pie in the sky doesn’t exist.
