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Commission

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.

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commission

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

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Commission. 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.

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Commission

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.