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 he/she does not have to pay a broker if he/she does not make orders. 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.