After the Trade Is Made, Revised by David M. Weiss

Author:David M. Weiss
Language: eng
Format: epub
Publisher: Penguin Publishing Group

IV-F-3-b Equity Transaction Comparison

IV-F-3-b-i What Is Being Compared?

Example: Stone, Forrest & Rivers purchases 100 shares of RAM at $46 from Chuck, Spear & Dukk (CSD). Since this is an agency transaction, SF&R’s client, Al Luminum, will pay $4,600 plus commission. Because commission rates are not set by the industry, each firm maintains its own commission schedule. Against this commission schedule, clients can negotiate a commission rate. SF&R charges Al $75 for this transaction. The total cost to the client is $4,675. The commission charged is SF&R’s income, or revenue. The $4,600 (100 shares×$46) is what SF&R owes the contra firm, CSD. Here’s what comparison between SF&R and CSD involves:1. SF&R bought 100 RAM @ $46 for $4,600 from CSD.

2. CSD sold 100 RAM shares @ $46 for $4,600 to SF&R.

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