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2018issue C1161

Commission analysis for brokerage execution costs

Editorial view: treat a brokerage shortlist as a commission-analysis filter on the order life cycle. Confirm that the firm accepts the intended instrument, then price advertised commissions against execution-speed, data access, and implementation-cost before research perks or popularity lists enter the choice.

  • Screen firms first for whether they handle the intended instrument, then choose between full-service-brokerage and discount-brokerage.
  • Compare advertised commissions with execution-speed, market access, real-time data, account minimums, tools, and support, not brand familiarity alone.
  • Implementation-cost is the full drag of the fill: commissions plus delays, poor access, and weak support around the order.
  • A click-ordered list of frequently viewed listings is not an editorial rating, and vendor-submitted listings are time-sensitive and not endorsed.
Entries in this reading1 entry
Current trackCommission analysis37 readings

What commission-analysis screens

Commission-analysis is a filter that uses order-book, spread, volume, auction, and trading-cost inputs over the life of an order to choose an executable path and account for implementation-cost. Implementation-cost is the full economic drag of getting an order filled, including commissions plus delays, poor access, and weak support around the fill.

In the historical workflow, a brokerage comparison is framed around execution-speed, commission levels, market access, real-time data, account minimums, tools, and support. Brand familiarity alone is not the frame. Execution-speed is how quickly a brokerage can turn an intended order into a live market action once the trader has decided to trade.

Instrument access before channel choice

The first screen is whether the firm handles the intended instrument. Only then does the choice between an advised desk and a no-advice online path arise.

Full-service-brokerage is an advised channel in which the trader works with a professional rather than placing orders alone. Discount-brokerage is a self-directed online channel that provides market access without professional trade advice. Institutions that offer advised brokerage commonly also offer a self-directed discount channel.

Research value and commercial-market-statistics

The historical workflow presents widely available online company information as reducing the incremental value of traditional brokerage research.

In less intensively studied but highly commercial markets such as futures, commercial-market-statistics can be material to the trading decision. Those figures include broker-supplied hedging-activity reports, which can matter more than generic company research in futures and similar commercial markets.

Clearing and investor-protection-coverage

Capital-safety due diligence includes asking about clearing operations and, for equities, investor-protection-coverage of customer funds. Clearing is the back-office path that settles trades and holds customer funds after an execution. Investor-protection-coverage is a capital-safety check, especially in equities, on whether customer balances sit behind a stated protection scheme.

Listings are not ratings

A click-ordered list of frequently viewed brokerage listings is explicitly not an editorial rating or ranking. Vendor-submitted brokerage listings are treated as time-sensitive, not endorsed, and disclaimed as to accuracy and liability.

Educational research material, not investment advice. Historical source context does not establish present-day performance.
30 of 32 in the Commission analysis track
201960-60 pp.Next on Commission analysisRanking futures liquidity before you size the orderUse a liquidity filter first. Activity marks of one or none flag little activity and a weaker candidate for speculative execution.
All readings on this track · 32 readings
  1. 1985Matching ticket size to negotiable commission schedules
  2. 1985Minimum tickets can price a small book out of its own exit
  3. 1992Stop-order slippage as an execution cost filter
  4. 1993Cost-aware walk-forward evaluation of pattern-detector signals
  5. 2001Audit high-turnover operating conditions as one procedure
  6. 2002Front-load futures commission and slippage
  7. 2005Inactive account fees as hidden implementation cost
  8. 2010A pre-trade liquidity screen for futures contracts
  9. 2011Currency option venues, spreads, clearing, and premium cost
  10. 2012Filter futures contracts by liquidity and implementation cost
  11. 2012Futures commission versus one tick of cost
  12. 2012Ranking futures liquidity for executable orders
  13. 2013Filter option day trades by spread, volume, and fees
  14. 2013Filter futures by liquidity, open interest, and effective margin
  15. 2014Book futures data fees as implementation cost
  16. 2015Use a futures liquidity rank as a pre-trade checklist
  17. 2015Filter unexecutable futures by liquidity, open interest, and margin
  18. 2015Futures liquidity ranking as an execution filter
  19. 2015Filtering option trades by bid-ask width
  20. 2016Exchange quote fees as execution costs and liquidity filters
  21. 2016Filter futures by liquidity, open interest, and margin cost
  22. 2016Comparing dollar-index futures execution costs and liquidity
  23. 2016A futures liquidity ranking as a screen for executable orders
  24. 2017Filter a futures board by liquidity, open interest, and implementation cost
  25. 2017Filter futures contracts by liquidity and margin cost
  26. 2017How residency rules raise futures implementation costs
  27. 2018Screen listed futures by liquidity, open interest, and margin
  28. 2018Contract selection is the first filter on competing bitcoin futures
  29. 2018Filter futures execution by liquidity and margin
  30. 2018Commission analysis for brokerage execution costs
  31. 2019Ranking futures liquidity before you size the order
  32. 2020Brokerage selection as an implementation-cost problem
By fieldLiquidity and costs119 readingsBy year201898 readings
All 37 readings tagged Commission analysis
Also on Commission analysis5 readings
1982Park good-till-cancelled targets after commissions at the chart bands1985Matching ticket size to negotiable commission schedules1985Minimum tickets can price a small book out of its own exit1991Evaluating a trailing stop against a coin-flip entry1992Stop-order slippage as an execution cost filter