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The fee paid to a broker to execute a trade, based on number of shares, bonds, options, and/or their dollar value. In 1975, deregulation led to the establishment of discount brokers, who charge lower commissions than full service brokers. Full service brokers offer advice and usually have a staff of analysts who follow specific industries. Discount brokers simply execute a client's order and usually do not offer an opinion on a stock. Also known as a round-turn. Commissions are known as round-turn only in futures trading, since the commission is assessed only after liquidation of the position.


A form of payment to a brokerage in which the brokerage receives a percentage of the value of each transaction that a client orders. Commissions are seen as advantageous to a client because if the client does not make orders, then he/she does not have to pay a broker. However, commissions create an incentive for brokers to make as many transactions as possible; this has resulted in the regulation of commissions by the SEC. The percentage of a commission varies by brokerage, with those charging higher commissions offering a wider variety of investment advisory services. Low-commission brokerages usually offer no investment advice and simply fill orders. See also: Fee.


The fee levied by a broker to undertake a trade on behalf of a customer. Because the amount of the commission for a particular trade is no longer fixed, it can vary considerably among firms. See also discount brokerage firm, full-service brokerage firm.
To what degree are brokerage commissions or other fees negotiable?

The ability to negotiate fees and commissions varies from firm to firm. Some firms are very flexible and give the individual advisors and brokers the ability to negotiate fees to some extent. Some firms offer a discount service via the Internet as well as a full service account. The degree of personal service and advice the investor requires will influence the amount of the discount.

George Riles, First Vice President and Resident Manager, Merrill Lynch, Albany, GA


Securities brokers and other sales agents typically charge a commission, or sales charge, on each transaction.

With traditional, full-service brokers, the charge is usually a percentage of the total cost of the trade, though some brokers may offer favorable rates to frequent traders.

Online brokerage firms, on the other hand, usually charge a flat fee for each transaction, regardless of the value of the trade. The flat fee may have certain limits, however, such as the number of shares being traded at one time.

The commissions on some transactions, such as stock trades, are reported on your confirmation slip. But commissions on other transactions are not reported separately.

In the case of cash value life insurance, for example, the commission may be as large as a year's premium.


  1. a payment to an AGENT or employee for performing particular services on behalf of a buyer or seller of a product, for example the sale of a financial security by a stockbroker (paid by the client); the sale of a car by a salesperson (paid by the garage owners). Commissions may be paid on a fixed or sliding scale basis related to the value of the transaction involved.
  2. a body which acts as an official regulatory or administrative authority with respect to a specified activity. For example, the COMPETITION COMMISSION hears cases of monopolies, mergers and anticompetitive practices referred to it by the Office of Fair Trading under UK competition policy The European Commission is the main body responsible for the day-to-day administration of the affairs of the EUROPEAN UNION.


  1. 1payments to AGENTS for performing services on behalf of a seller or buyer. Commissions are usually based on the value of the product being sold or bought. Examples of commissions include salespersons’ commissions, estate agents’ fees and insurance brokers’ commissions.
  2. a body that acts as an ‘official’ regulatory or administrative authority with respect to a specified activity. For example, the COMPETITION COMMISSION hears cases of monopolies, mergers and anticompetitive practices referred to it by the Office of Fair Trading under UK competition policy. The European Commission is the main body responsible for the day-to-day administration of the affairs of the EUROPEAN UNION.


The compensation paid to a real estate broker for services rendered in connection with a sale,exchange, or lease of property. In order to be entitled to a commission, the broker must have a written contract for the services and must be licensed in the state. Generally the commission is fully earned if the broker produces a buyer who is ready, willing, and able to close at the terms specified in the listing agreement. This is true even if the seller elects not to accept the offer and withdraws the property from the market or increases the price.

Commission rates. Commissions are negotiated independently between the parties. Setting commission rates in advance by local real estate boards or other organizations is a violation of federal law. Most listing agreements now contain a disclaimer advising that commissions are separately negotiated on a case-by-case basis.

Sales commission amounts. Typically expressed as a percentage of the gross sales price of the property, usually ranging from 6 to 10 percent, although higher and lower percentages may be negotiated.

Leasing commissions. Compensation paid to an agent upon lease execution. It is usually calculated as a certain percentage of the total anticipated rent payments, up to a 5-year term.

Example:  If the leasing commission is 4 percent on a 5-year lease at $12,000 per month, then multiply $12,000 by 60 months to arrive at $720,000 and the broker is paid 4 percent, or $28,800. The parties may negotiate a lesser percentage for a term longer than 5 years, to be paid at the 5-year anniversary date.

Leasing commissions—lump sum. Sometimes negotiated to be equal to one or two month's rent, or even a certain amount per square foot. The drawback to this method is that the broker is compensated the same for a 3-year lease as for a 10-year lease.

Leasing commissions—payment over time. Occasionally, leasing agents prefer to receive their commissions as each payment of rent is made, rather than in a lump sum at lease signing. The effect is to provide a guaranteed income for many years.


The broker's fee for purchasing or selling securities or property for a client.

An allowance paid to a salesperson or agent for services rendered.
References in periodicals archive ?
QCommission is a flexible, powerful solution designed to automate the most complex sales commission processes and to calculate sales representatives' compensation, accurately, quickly and professionally.
Improved accuracy and confidence in sales commission numbers;
83 as a result of expensing sales commissions for the corporation's bank loan interval funds in the first two quarters of fiscal 1999.
8 million or 27 percent primarily because of the change in accounting treatment of sales commissions for the corporation's bank loan interval funds.
a provider of sales commission solutions announced that Union Fidelity Mortgage, a premier provider of mortgage services has chosen QCommission Pro to automate its sales commission processes.
7 million or 38 percent because the Company is no longer expensing sales commissions for its bank loan interval funds and because of lower sales and marketing costs associated with the lower fund sales volume.
The fourth quarter 1998 loss resulted from the October 8, 1998 Financial Accounting Standards Board (FASB) staff announcement that required expensing sales commissions incurred by an investment advisor for the distribution of shares of certain types of funds.
They should also refrain from directing sales commissions towards the buyer's costs.
The quarterly comparisons are not comparable because the Company expensed sales commissions for its continuously offered closed-end bank loan funds in the second quarter of fiscal 1999, while it capitalized and amortized these commissions in the second quarter of fiscal 1998.
The level of detail management enabled by HomeFront is remarkable, as it can track everything from pricing requests on custom options, sales commissions, and settlement reporting, to customer paint choices by room.
NYSE: EV) announced today that beginning May 1, the start of the Company's third fiscal quarter, it resumed capitalizing and amortizing sales commissions it pays to broker- dealers for sales of its interval funds, Eaton Vance Prime Rate Reserves and EV Classic Senior Floating-Rate Fund.
On average, Homekeys sellers have their homes on the market for about 22 days and save about $14,600 versus traditional 6 percent sales commissions.