Contrary to traditional belief, trading commissions are not the biggest source of revenues for brokerage firms.
Trading commissions, which made up 80% of the company's revenue in the late 1990s, represent just 27% now.
Online brokerages brought trading commissions for retail investors down to negligible levels and encouraged clients to trade like maniacs.
Then, by adding two known costs, the annual expense ratio and trading commissions, Barra computed what it calls a fund's hurdle rate.
Further, clients are not trading as much anymore, which reduces trading commissions.
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First of all, it does not take into account the effect of investment fees, such as management fees and trading commissions, on your returns.
"The concern is that those who are pushing into prime brokerage are either aggressively lending" or cutting trading commissions to get the business, he said.
That doesn't mean they can overcome other problems, such as trading commissions and disparities between the trading price of an ETF and its underlying stocks.
This isn't a cheap strategy, either in taxes or trading commissions.
In the past, trading commissions made ETFs impractical for small investors.
An exception to the general rule that banks are expensive: a Bank of America account called Merrill Edge, which beats even the discounters on trading commissions.
Some of the underlying managers own affiliated brokerages and may execute trades at commission rates that are not competitive or churn portfolios to generate trading commissions.
Hedge funds, of course, have become a highly desirable customer segment for Wall Street, accounting for 10% of commodities revenue and 30% of equity trading commissions.
Some say they are slashing trading commissions and loan fees and trimming collateral requirements for margin loans made to buy more stocks, bonds, commodities and currencies.
That vulnerability, which isn't limited to Chinese brokers, comes amid increased competition and a move to electronic trading by investors, which has cut into trading commissions around the region, said H.
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These investors need to be wary of not only trading commissions and exchange fees, which go up as you break a large order into smaller pieces, but also market impact and opportunity costs.
The full-service brokers are changing too, partly to meet the challenge of Schwab and others, partly because it is harder to get away with the juicy trading commissions they used to charge clients.
Other divisions paled in comparison to the success of investment banking, as trading commissions rose slightly and principal transactions actually declined 38% from the three month period a year ago (ended June 30, 2009).
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The Uzbek prosecutor general's office now claims that by overcharging for these imports and taking straightforward trading commissions, the Maqsudis siphoned off much of CCBU's profits and stashed them in offshore accounts to avoid tens of millions of dollars in taxes.
Trading volumes and commissions were not the only Wall Street activities under pressure in 2012.
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The fees for the advisers are less than 1% for everything, including advising, commissions, trading and custody of assets.
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Commissions from trading bonds or stocks in Southeast Asia are also between 20% and 40% higher than in the rest of the region, including China, according to McKinsey.
Others are more of the traditional "stock jockey" variety who are paid by commissions on trading activity, and possibly through what can be inelegantly but accurately described as kickbacks for selling particular products (fee-laden funds and annuities, for example).
You'll pay some commissions and other trading costs to assemble the portfolio, but after that the maintenance costs are minimal.
Higher trading costs and the associated commissions earned by IFAs certainly contribute to these outcomes, since the researchers find that advised accounts feature higher portfolio turnover (though not necessarily more frequent trading) relative to self-managed accounts.
The infractions committed by these financial representatives and their firms span a broad range, including misrepresenting investments, omitting facts, overtrading to generate commissions, unauthorized trading in client accounts, unsuitable recommendations, overconcentration in risky investments, breach of ethical duty and lack of management oversight.
These managers were paid based on the percentage of assets they managed, rather than collecting commissions and spreads through trading.
The published performance numbers are net of commissions, expenses and trading impact.
Advisors typically collect higher fees for trading strategies, brokers collect more commissions, exchanges earn a fee from each transaction, and market makers gorge themselves on the bid-ask spread.
But the other half, the researchers explained, are trading costs bid-ask spreads and commissions paid to market makers and dealers.
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