IB and CTA Relationshps
IB and CTA relationships are important to
understand in terms of the potential benefits to both parties concerned.
The number one benefit for the CTA is the Introducing broker's resource to a pool of existing customers
and their ability to pass on these customers to the CTA. This alone is a good justification for the CTA to form a relationship with the IB and therefore a viable mutual relationship. The CTA increases their
customer base and the IB is able to generate more commissions.
Business extension is a distinctive reward and
a reason why It is wise for the CTA to consider an established Introducing broker. When a CTA partners with an IB it expands their reach and
sphere of influence. The IB is about the closest thing for the CTA to
opening up a new office. This recognition of expanding influence is a
two-way street as well. When treating Introducing Brokers as an extension
of the CTA Business,the IB's Development team will work harder for the CTA
more so than any other broker they have an agreement with.
Free IB consultancy
Free IB consultancy for
the CTA is possible throughout the entire business life cycle, This is especially
helpful within the initial set up phase as it can be a daunting experience handling all of the NFA general compliance hurdles. The introducing broker can
assist on all matters including, but not limited to:
Software Platform technical help
Business Set up
Customer on boarding
Help with navigating through the whole
process from inception to NFA approval
Personalized customer service is achieved once the CTA is up and running and the
introducing broker is able to stream line back office operations. This means that the CTA is
able to better concentrate and focus solely on trading. This is made possible by saving time via::
No 800 number and multiple departments to
deal with - i.e. direct access to the IB
All calls and emails answered more
promptly as it is in the IB's best interest
Saving time by allowing the IB to take
care of any issue/s that arise.
to reliable and proven resources
Access to reliable and proven resources is a great benefit to the CTA. Most IBs have access to many valuable
services that could be useful to the CTA. These services range as follows:
Compliance consultancy services
Custom Algorithm services
Accounting and Bookkeeping
CPA (CTA Specialist)
IT Services - for data analytics
Commission Rebates can be a big plus for obvious reasons. In certain circumstances IBs are able to offer a commission
rebate back to the CTA. Since the IB is compensated each time their client
makes a round turn trade, some IBs, especially those with a large enough client
base, will offer their CTAs a rebate on every trade they make.
Many CTAs use this trade rebate as an instrument to preserve
their capital, and others look at it as a way to tighten the spread. Regardless
of what angle the CTA look at from, it’s
free money to receive on every trade.