Broker charge definition
A broker charge is a fee paid to an agent or company for facilitating a transaction between a buyer and a seller. It might be a charge for sales or negotiation services, or for providing advice about the transaction.
A broker charge will usually be based either on a percentage of the overall transaction value or a flat fee.
For example, if you want to buy shares in a FTSE-listed company, your broker may charge you 0.1% of the value of the transaction, subject to a minimum flat fee of £10.
Example 1: You decide to buy 8000 shares of stock ABC, which has a share price of £1 per share. The broker charge is calculated like this:
8000 x £1 = £8000 notional value
£8000 x 0.1% = £8
As this is lower than the minimum fee, you will be charged £10.
Example 2: You choose to buy 10,000 shares of stock XYZ, which has a share price of £3 per share. Here’s how the charge works:
10,000 x £3 = £30,000 notional value
£30,000 x 0.1% = £30
As this is more than the minimum fee, you will be charged £30.