Brokerage

The Jolly Contrarian’s Glossary The snippy guide to financial services lingo.™ Go Premium Index — Click the ᐅ to expand: Glossary Comments? Questions? Suggestions? Requests? Insults? We’d love to 📧 hear from you. Sign up for our newsletter.

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