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2. The difference between the price a broker-dealer charges for a retailer to buy a security and the price at which the broker-dealer sells the same security to a market maker. This may or may not be considered a commission.
A markdown is the amount a broker-dealer earns on the sale of a fixed-income security and is the difference between the sales price and what the seller realizes on the sale.
The markdown may or may not appear in the commission column or be stated separately on a confirmation statement.
A markdown is determined, in part, by the demand for the security in the marketplace. A broker-dealer may charge a smaller markdown if the security can be resold at a favorable markup.
The term markdown also refers more generally to a reduced price on assets that a seller wants to unload and will sell at less than the original offering price.