Managing sub-IBs · Lesson 1 of 3
How multi-tier IB structures work
4 min read
Draft lesson — under editorial review
As an IB grows, they sometimes build a network of other introducers who refer clients under them. This is called a multi-tier structure. Done properly, it lets experienced IBs support newer ones; done badly, it can drift into something that looks like a pyramid scheme. This lesson explains how these structures work, how the money flows, and where the line sits.
The roles in a multi-tier structure
| Role | What they do |
|---|---|
| Broker | Provides the trading accounts and platform, holds client money, and pays commission under its partner terms |
| Master IB | An IB who has other introducers, called sub-IBs, registered under them |
| Sub-IB | An introducer who refers clients and sits under a master IB in the broker's system |
| Client | The person who opens an account and trades |
The master IB usually recruits, trains and supports the sub-IBs. In return, the master may earn an override: a share of commission generated by the sub-IBs' clients.
How override commission works
Brokers arrange this in different ways. Two common models are:
- Split model: the broker pays one total rate for the network, and the master IB decides how much of it passes to each sub-IB.
- Direct model: the broker pays the sub-IB its own rate directly and pays the master IB a separate override on top.
Some brokers limit the number of tiers, set the split themselves or do not offer multi-tier structures at all. Everything depends on your broker's written terms, so read them before you promise anything to a potential sub-IB.
Worked example (illustrative)
The figures below are illustrative only. Real commission depends on genuine client trading and on the broker's terms, and it can be zero.
Assume a split model in which the broker pays 8 USD per standard lot traded by clients in the network. The master IB agrees to pass 6 USD per lot to a sub-IB for the clients that sub-IB introduces, keeping 2 USD per lot as an override.
Month 1: the sub-IB's clients trade a total of 50 standard lots.
- Total paid by the broker: 50 × 8 = 400 USD
- Sub-IB's share: 50 × 6 = 300 USD
- Master IB's override: 50 × 2 = 100 USD
- Check: 300 + 100 = 400 USD
Month 2: the sub-IB's clients do not trade at all.
- Total paid by the broker: 0 × 8 = 0 USD
- Neither the sub-IB nor the master IB earns anything from that part of the network.
The second month matters as much as the first. In a legitimate structure, nobody is paid simply for being in the network. Income only exists when real clients trade through a regulated broker. And because commission rises with trading, the conflict of interest from the client retention course applies at every tier: nobody in the network should encourage clients to trade more.
Legitimate network or pyramid scheme?
A pyramid scheme is a structure where people are paid mainly for recruiting others, typically from the fees those new recruits pay, rather than from a genuine product or service. Pyramid schemes are illegal in many countries and they collapse when recruitment slows, leaving most participants out of pocket.
| Feature | Legitimate multi-tier IB network | Pyramid scheme |
|---|---|---|
| Source of income | Commission from genuine client trading at a regulated broker | Joining fees, package sales or payments from new recruits |
| Cost to join | Free to become a sub-IB | Must pay to join or buy an upgrade or "package" |
| Role of recruitment | Optional; each sub-IB earns from their own clients | Income depends mainly on recruiting more recruiters |
| Without new recruits | Still works, as long as clients trade | Collapses |
| What is being sold | Access to a real trading service | Mainly "the opportunity" itself |
Rules to follow
- Never charge sub-IBs a fee to join your network, and never sell "IB packages".
- Never pay anyone for recruiting alone; all income should trace back to client trading.
- Never promise sub-IBs a level of income. Recruiting sub-IBs is itself a form of promotion, so the red lines from the compliance course apply here too.
- Check whether sub-IBs need any licence or authorisation where they operate, which depends on the jurisdiction.
Key takeaways
- A master IB supports sub-IBs and may earn an override on commission generated by the sub-IBs' clients.
- How splits and overrides work depends entirely on the broker's written terms.
- Any commission figures are illustrative; real commission depends on genuine client trading and broker terms, and can be zero.
- In a legitimate network, all income comes from real client trading, never from recruitment or joining fees.
- Never charge to join, never pay for recruitment alone and never promise income to sub-IBs.
Educational content only — not financial advice. Trading leveraged products such as forex and CFDs carries a high risk of losing money.