Broker Client Markups

Brokers have the ability to charge their clients for services rendered based on a fee-per-trade unit for each asset class (e.g. stocks, options, etc.), exchange and currency ⁽¹⁾. The trade unit is determined by the unit Interactive Brokers uses for its commissions charges and can be on a per share, per contract, or % of trade value basis. For each Asset Class/Currency, the following parameters may be entered:

1. Minimum Amount per Trade.
   
   
2. Absolute markup amount which is added to the Interactive Brokers commission. Absolute markup is entered in the currency or exchange of the asset class. The unit column indicates if the absolute markup gets applied to shares, contracts, or % of notional value and up to three decimal places may be entered. As an example, when you enter "1" Absolute Markup on the USD option line, and if one IB Smart option contract were executed, the client would be charged $2 ($1 is the standard IB commission, and $1 is specified as an absolute markup).
   
   
3. % Markup which is computed by multiplying the % times the Interactive Brokers Commission. The % markup is entered as a percentage without the decimal point. As an example, if you enter "100" percent markup on the EUR stock line, if IB charges 10 EUR for a trade the client will be charged a total of 20 EUR for the trade (10 EUR for IB with a 100% match).
   
   
4. An absolute amount from which the Interactive Brokers commission is subtracted. Three tiers for absolute amount are available based on volume breaks. Brokers should monitor their customers commissions as it is possible for Interactive Brokers to charge more than the client fee. The absolute amount requires the input of 1 to 3 fees (Fee#1, Fee#2, Fee#3) that are specified by volume breaks (Vol#1, Vol#2) on a per trade basis. The unit column indicates if the absolute markup gets applied to shares, contracts, or % of notional value and up to three decimal places may be entered. As an example, if you wanted to charge .4% for up to 500 shares, .3% for up to 1,000 shares, and .2% above 1,000 shares with a minimum of 10 GBP for GBP stocks, you would enter:
   
   

   Minimum	Fee#1	Vol#1	Fee#2	Vol#2	Fee#3
   10	.4	500	.3	1,000	.2

   
   IB standard UK fees of .1%, and stamp tax of .5% would be subtracted from the absolute fee specified above.
   
   Customer Absolute Tiered Commissions are mutually exclusive from Interactive Brokers Tiered Commissions. They can be combined with IB Tiered Commissions, or one customer absolute rate can be used with IB Tiered Commissions.
   


5. In addition to (or on top of) an absolute fee, any exchange or regulatory fees can be passed through to the customer by checking the “Pass Through Fees” column (right column). As an example, 1,000 shares @ $.01 per share + Exchange Fee Pass Through of $.003 per share = (1,000 * .01) + (1,000 * $.003) = Total Fee charged of $13.00.
   

Only one markup scheme (i.e. items 2, 3 or 4 above) may be chosen per asset class/currency. Markup schedules may be specified on a global basis or an individual account basis. If no markup schedule is created for an individual account, the global schedule will apply.

Absolute Fees for Specific Products and Exchanges

Brokers have the ability to specify absolute fees for specific products and specific exchanges, but only in the global fee schedule. Brokers can also specify a tiered commission schedule and Pass Through Fees for specific products and specific exchanges, but again, only in the global fee schedule.

All commission markups are specified within Account Management on the Funds Management/Client Fees screen.

Brokers can mark-down credit and short proceeds credit interest and mark-up debit interest. Markups and Markdowns are entered as %s with the following fields available for input:

1. Pay Client No Credit Interest. If this box is checked all credit and short proceeds credit interest will be paid to the broker and the client will not receive any revenue.
   
   
2. Credit Markdown. A % amount will be subtracted from the credit interest paid and given to the broker. Clients will not be charged negative interest so if the markdown is greater than the currently available credit interest rate then no interest will be paid.
   
   
3. Debit Markup. A % amount will be added to the debit interest. The maximum markup is 1%.
   
   
4. Short Credit Markdown. Operates like the Credit Markdown.