IB Agreement

An IB agreement establishes the commercial and legal terms under which an introducing broker refers clients to a forex broker. The core of the agreement is the commission structure, which specifies whether the IB earns lot-based commissions, spread-based commissions, CPA, or a hybrid model. The agreement defines exactly which trading instruments qualify for commission, what the per-lot or per-trade rate is, and whether rates vary by account type or trading volume thresholds.

Beyond commissions, the IB agreement covers several operational and compliance areas. Payment terms specify the payout frequency, minimum payout thresholds, and the currency in which commissions are settled. Compliance clauses outline the IB's obligations around marketing practices, regulatory disclosures, and prohibited promotional methods. Many agreements also address client ownership -- whether referred clients remain attributed to the IB if the agreement is terminated, and whether the IB retains trailing commissions on existing clients or only earns on new referrals.

For brokers, a well-structured IB agreement reduces disputes and sets clear expectations. Key provisions to define include: the attribution window for linking referrals to the IB, the handling of sub-IB arrangements and override commissions, clawback conditions for fraudulent or non-qualifying accounts, and the process for modifying commission rates. Ambiguity in any of these areas creates friction as the IB network scales, so brokers benefit from standardizing agreement templates while allowing flexibility in commission tiers for high-performing partners.