Brokerage

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The fees one pays a broker to buy or sell securities for one, or to a swap dealer or enter in to derivatives having an equivalent effect. The strict difference is that cash brokerage is usually a form of commission — payable to an agent for brokering a transaction between two principals, whereas synthetic brokerage is a fee paid to one’s principal, the swap counterparty and is not, as such, a commission in that pure sense.

But, unless you are in the habit of inviting pedants to dinner, the distinction is a fine one indeed.

See also

• Principal and agent
• Broker and dealer and that gruesome hybrid, the broker-dealer
• Prime brokerage transactions