IB (Introducing Broker) Explained: How Forex Commissions Work

An IB, or Introducing Broker, is a person or entity that refers clients to a Forex broker and gets paid a share of the fees that client pays the broker. It isn't a salary, and it isn't a sales commission. It's a cut tied directly to how much that client actually trades.

This article carries no referral links to any broker or IB. It's written purely to explain the mechanics, because a scan of the top-ranking pages for this topic shows almost all of them come from brokers themselves or blogs with a sign-up link tucked in, which tends to tilt the explanation toward promotion without the writer even meaning to.

How an IB Works: Where the Money Actually Flows

It starts with the spread or commission a broker collects on every order a client opens, win or lose. The broker already pockets that money as a matter of course. What an IB does is bring a new client to open an account with that broker, and in return, the broker shares a slice of what it collects from that client back to the IB.

Put simply, the money isn't coming out of the client's pocket on top of what they already pay. It's the same pool of money the broker was already collecting, just split two ways: one share to the broker, one share flowing to the IB who brought the client in.

A Simple Commission Calculation Example

Say a client opens a 1-lot gold order. The broker collects a hidden fee of $7 in the spread per round trip. If the broker has agreed to share 50 percent of that with the IB, the IB earns $3.5 per lot the client trades, regardless of whether that client ends up in profit or loss.

Now multiply that across a client base. Say one IB has 50 clients under their referral, each trading an average of 20 lots a month. That's 1,000 lots a month, times $3.5, for roughly $3,500 a month in rebates alone, without selling anything else. Actual split rates vary by broker and account type; this figure is illustrative only.

IB vs. Affiliate vs. Partner: What's the Difference?

These three terms get used interchangeably often enough to cause real confusion, but in practice the distinctions are clear.

The line between the three blurs in practice. Some brokers call their IBs "affiliates" simply because they run both through the same tracking system. What actually matters isn't the label, but whether the income structure is tied to continuous trading volume or ends at a one-time event.

Why Brokers Are Willing to Pay IBs

The reason is straightforward. Customer acquisition through advertising gets more expensive every year. Paying a share to someone who already has a client network is a variable cost tied to actual results, paid only when a client genuinely trades, rather than a fixed upfront ad spend that might land zero clients at all. From a marketing risk standpoint, that model is simply more favorable for the broker.

The Catch: An Incentive Tied to Trading Volume

This is the mechanism worth understanding clearly, not because it's illegal or unethical on its own, but because it's a structure with a real side effect.

When an IB's income is calculated from the number of lots a client trades rather than the client's actual profit, the theoretical result is an incentive for the IB to want the client trading more often, whether or not that frequency actually suits the client's situation. This is a structural conflict of interest. It isn't about any individual being a bad actor; it's an incentive the system itself creates.

A good IB won't let that incentive override the advice they give a client. But as a trader, knowing this mechanism exists helps you read any advice you receive more critically, especially if that advice tends to land on "trade more often" or "open another account."

The Legal Status of IBs in Thailand

Thailand has no dedicated licensing framework for IB activity in Forex, because retail Forex margin trading itself isn't regulated by the SEC either. The SEC's own investor-education site states directly that foreign exchange trading isn't classified as a securities business, so it doesn't fall under SEC oversight, and no individual or entity outside of banks or licensed securities firms has ever been granted a license to trade foreign currency online for investment purposes. The Bank of Thailand confirmed the same point plainly in a June 2026 statement: it has never had a policy of licensing FOREX businesses, and operating one is an offense under Thailand's currency exchange control law. When the product itself carries no license, the activity of referring clients to that product doesn't carry a separate licensing framework of its own either.

That doesn't mean being an IB is illegal in every case. It means no Thai authority protects or regulates this activity directly. If a dispute arises between an IB and a client, or between an IB and a broker, there's no complaint mechanism the way there is for a licensed financial business in Thailand. Anyone considering becoming an IB, or currently working with one, should understand this limitation going in.

Frequently Asked Questions

Is being an IB legal?

No Thai law directly prohibits referring clients to a foreign broker. But the activity also isn't licensed or regulated by any Thai authority, so it carries none of the legal protection that comes with a licensed financial business.

How is an IB different from an affiliate?

An IB typically stays involved with clients long-term, with income tied to ongoing trading volume. An affiliate's role mostly ends once the referral succeeds, and the payout is usually a one-time commission or a short-term arrangement.

Who actually pays the IB's commission?

The broker does, out of the fees (spread or commission) it already collects from the client. The client doesn't pay anything extra because an IB is in the picture; the cost they were already paying the broker just gets redistributed between the broker and the IB.

Bottom Line

An IB is a middleman who receives a cut of fees the client was already paying the broker, not an added cost the client has to shoulder directly. But a structure that ties income to trading volume creates a structural incentive worth knowing about, and in Thailand this activity still sits outside any regulator's licensing framework, the same as the Forex margin product itself.

Before trading on any IB's recommendation, always verify the underlying broker's license first (see How to Verify a Forex Broker's License in 5 Minutes), understand how broker regulation affects your account (see Forex Broker Regulation and How It Affects Your Investment), and know what to actually look for before choosing one (see What to Look for in a Forex Broker). This article covers mechanics only. It isn't personalized investment advice, and it doesn't recommend or endorse any broker or IB.

Sources

1. Bank of Thailand, statement confirming no policy exists for licensing FOREX businesses, violations subject to imprisonment and fines (June 25, 2026) - https://www.bot.or.th/th/news-and-media/news/news-20260625.html
2. Securities and Exchange Commission, Thailand (SEC), "SEC's Legal Authority" investor-education page - https://www.smarttoinvest.com/Pages/Investment%20Products/Investment%20knowledge/SEC-and-legal-authority.aspx