Multi-Level IB Hierarchies
Multi-level IB structures are far more common in Forex than in other affiliate verticals. A master IB recruits sub-IBs, who may recruit their own sub-IBs. Each level earns a commission on the trading activity generated below them. Managing these structures correctly is essential for Forex brokerages operating in markets like Southeast Asia, MENA, and Latin America.
How Multi-Level IB Works
In a typical three-level structure:
- Level 1 (Master IB): Earns commission on their own clients plus a smaller override on all clients brought by their sub-IBs.
- Level 2 (Sub-IB): Earns commission on their own clients plus an override on Level 3 clients.
- Level 3 (Sub-sub-IB): Earns commission on their own clients only.
| Level | Own Client Commission | Level Below Override |
|---|---|---|
| Master IB | $7 per lot | $2 per lot |
| Sub-IB | $5 per lot | $1 per lot |
| Sub-sub-IB | $3 per lot | None |
In this example, if a Level 3 client trades 10 lots, the Sub-sub-IB earns $30, the Sub-IB earns $10 override, and the Master IB earns $20 override. The total brokerage cost is $60 per 10 lots from that client.
Always calculate your total cost across all levels before setting rates. In the example above, the total IB cost is $6 per lot ($3 + $1 + $2), which must be lower than your revenue per lot to maintain margin.
Rebate Models
Some brokerages allow IBs to pass a portion of their commission back to traders as a rebate. This is a powerful acquisition tool: the trader gets a lower effective cost of trading, and the IB uses the rebate as a marketing incentive. Your platform needs to support configurable rebate rules per IB.
Managing Complexity
- Automated hierarchy tracking: Your platform must automatically track the IB tree and calculate commissions at every level in real time.
- Visual hierarchy view: IBs need to see their network structure, including who they recruited, who those IBs recruited, and the trading volume at each node.
- Dispute resolution: Clear policies for what happens when an IB leaves and their sub-IBs want to be reassigned.
- Commission cap per trade: Set maximum total IB cost per lot to prevent margin erosion on deep hierarchies.
- Inactive pruning: Define rules for what happens when an IB in the middle of the hierarchy becomes inactive.
Regional Considerations
Multi-level IB structures are especially important in certain regions. In Southeast Asia, Malaysia and Indonesia have large IB communities where multi-level recruitment is the norm. In the Middle East, personal networks drive IB recruitment. In China, IB hierarchies can be deep and complex. Your platform and commercial terms must accommodate these regional patterns while maintaining margin control.
Key Takeaways
- Multi-level IB structures are common in Forex, especially in Asia and MENA.
- Calculate total cost across all levels before setting commission rates.
- Support rebate models that let IBs pass commission back to traders.
- Your platform must automate hierarchy tracking and multi-level commission calculations.
Explore Further
Key terms and tools related to this lesson. Deepen your understanding and see how Track360 supports these concepts.
Sub-IB
A Sub-IB is an introducing broker recruited by another IB (the master IB) rather than directly by the broker. Sub-IBs operate under a multi-tier structure where commissions cascade from the broker through the master IB layer.
Introducing Broker (IB)
An Introducing Broker is a partner who refers new traders to a Forex or CFD brokerage in exchange for ongoing commissions, typically calculated on the trading volume or revenue generated by those referred clients.
Conversion Rate
The percentage of clicks or visitors that complete a desired action, such as making a first deposit, opening an account, or purchasing a trading challenge.
Affiliate Manager
An affiliate manager is the operator-side role responsible for recruiting, onboarding, managing, and optimizing affiliate partnerships within a partner program.