Broker Commission: Definition, Calculation & Comparison

12 November 2026 by Cristina Balan

To let you trade the financial and stock markets, brokers charge several types of fees on investors’ transactions, including spreads, which are the difference between an asset’s buying and selling price, and the broker commission, which we’ll look at in more detail in this article.

Broker Commission: Definition

A broker’s commission is its payment for the services it provides, covering both the management of your trading account and the execution of your market entry and exit orders. The broker acts as an intermediary between the investor and the market.

To go further, also read our guides “Alti Trading Review 2026”, “Alti Trading Review 2026” and “REGAFI”.

How Do Brokers Make Money in 2026?

As intermediaries between investors and the financial markets, brokers are service providers paid in return for this service. To make money, online brokers can use different types of charges, mainly spreads and commissions. Here are the details of these two ways brokers are paid.

Earning Through the Spread

First, the vast majority of brokers on the market earn their money from the spread. The spread can be fixed but is most often variable.

In practice, to generate profits from the spread, brokers apply this charge to every trade made on the market in return for acting as an intermediary between traders and the financial markets.

Of course, the spreads charged, which correspond to the gap between an asset’s selling and buying price, vary depending on the asset and the broker.

Earning Through Commission

Not all brokers do this, but some have chosen to earn their money through commissions. The commission is also charged on every transaction, but the investor knows it in advance. These commissions may be charged on their own or on top of the spread on certain assets, such as stocks. It’s therefore important to check your broker’s pricing carefully before choosing your intermediary.

The commission can be expressed as an amount per transaction or as a percentage of the transaction amount.

Again, the amount of commissions and the assets they apply to vary from broker to broker, so you need to compare the offers of the different market players carefully.

Choosing Between a Spread Broker and a Commission Broker in 2026

As we’ve just seen, some brokers earn their money only through spreads applied to each buy or sell transaction, while others earn it entirely or partly through commissions.

Choosing between a spread broker and a commission broker is tricky, as each type of fee has pros and cons. Variable spreads are often more attractive when market conditions allow, while commissions have the advantage of being more transparent because they are known in advance.

Each trader therefore needs to choose based on their personal preferences.

ECN, STP or Market Maker Broker

The commissions charged by brokers also vary by broker type. There are three main types of brokers: ECN brokers, STP brokers and market maker brokers. Let’s look at the different commissions charged by these brokers to help you better understand the business.

How ECN Brokers Are Paid

First, ECN (Electronic Communication Network) brokers are actually marketplaces, which means trades are executed directly on the interbank market.

These brokers are also called no-dealing-desk brokers.

Here, the broker displays an order book, and the various participants, including banks, market makers and traders, are counterparties acting as sellers and buyers. By bringing these market participants together, the ECN broker matches its clients’ buy and sell orders.
But what happens when an order finds no counterparty? In that case, the ECN broker can call on liquidity providers, usually banks, which offer clients deep liquidity and tight spreads in normal market conditions.
This brings us to how this type of broker is paid, which isn’t through the spread. While these brokers often show traders particularly competitive variable CFD spreads, their income actually comes from a commission on trading volume. On average, this commission is around 10 to 20 dollars per million traded.
For the investor, the spreads offered by an ECN broker are generally attractive and competitive, and prices are displayed in real time, in line with interbank market quotes. This provides complete transparency, and all market participants have access to the information.
However, one drawback of ECN brokers for traders concerns periods of market volatility, such as major economic announcements or events. During these periods, spreads tend to widen, which increases traders’ transaction costs.
It’s also worth noting that ECN brokers used to be accessible only to institutional investors. But for some time now, their services have also been available to individuals. For retail traders, the ECN brokers themselves act as liquidity providers, and these brokers are often banks.
ECN brokers are particularly popular with investors partly because they don’t trade against them: an ECN broker only hedges traders’ positions on the interbank market. But be careful! Some non-ECN brokers use the ECN label to win the trust of new clients without actually being ECN brokers.

How STP Brokers Are Paid

Another type of broker is the STP broker. These brokers work in much the same way as ECN brokers, but the liquidity offered to traders comes only from a third-party provider. This means the STP broker doesn’t match buying and selling counterparties, which lets it guarantee much faster execution.
STP brokers’ spreads are therefore more stable than those of other brokers. These brokers are simply intermediaries between the trader and the banks, and the prices displayed are those the bank shows on the interbank market.
These brokers are paid solely based on their clients’ trading volume or through the spread. When paid through the spread, the STP broker slightly raises an asset’s buying price and slightly lowers its selling price, and this difference generates its profit.
Also called “pure brokers”, these brokers don’t take positions against traders either, as they are automatically hedged by their liquidity providers. Using an STP broker also allows scalping strategies, since the broker automatically hedges all of its traders’ positions on the interbank market.
As well as offering deeper liquidity, STP brokers also offer some significant advantages in terms of services and customer relations, with more innovative tools and many decision-support features such as analysis, signals, advice and even managed accounts or automated trading systems.

How Market Maker Brokers Are Paid

Finally, the last type of broker you’ll find on the market is the market maker, also called a “dealing desk broker”. This means the broker doesn’t pass its traders’ orders to the market but processes them internally.
Of course, processing trades internally, including hedging, can create conflicts of interest with its clients, as the market maker must set out a strategy to hedge its risks in a “risk book”. In this book, it records its volume position on each asset. It then adapts how it handles your trades according to various criteria, including your level as a trader and the volume of your trades.
More specifically, below a certain threshold, the market maker offsets orders internally without sending them to the markets, so it is the trader’s counterparty. As a result, if you win, the broker loses, and vice versa. Note also that scalping isn’t allowed by this type of broker, as it doesn’t have time to hedge. Above the set threshold, trades are hedged by a liquidity provider or bank in return for a commission.
As for commissions, market makers earn their money only through a fixed spread. They apply a small difference to the spread offered by their liquidity provider, and pricing lacks transparency here. Although market makers have become increasingly common in recent years, this is mainly thanks to their fixed spreads, guaranteed stops and welcome promotions.

Market Maker vs ECN Broker Comparison

ECN	STP	Market Maker
Orders passed to liquidity providers and other market participants (traders, brokers, etc.)	Orders passed to liquidity providers	Orders executed by the broker at its discretion
Spreads from 0 pips + commissions	Fixed or variable spreads	Fixed spreads
Prices from matching market participants’ orders and from liquidity providers	Prices from liquidity providers	Discretionary prices
Automatic execution, no requotes	Automatic execution, no requotes	Execution from the dealing desk by taking the opposite side of the trader’s orders, or by passing orders to a market maker + possible requotes
Market depth visible	Market depth not visible	Market depth not visible
Minimum deposit usually high	Minimum deposit usually low	Minimum deposit usually low or zero

Find all our tips on choosing between an ECN broker and a market maker broker in this article.

Transaction Fees and Commissions of CFD Brokers

To better understand how a broker’s commission is set, you also need to look at the specific case of CFDs, or contracts for difference. As the fees applied to these contracts vary from market to market and broker to broker, they can seem complex to investors.

Remember that CFDs let you speculate on almost every financial instrument, so the way clients are charged can change completely depending on the asset class.

Besides spreads, before using a CFD broker’s services, it’s strongly recommended that you read all the information provided about the broker’s fees carefully.

What Does CFD Trading Cost in 2026?

Traders using CFDs to trade the market face three basic types of fees:

Spreads – These fees, which can be considered hidden fees, are the difference between the bid and the ask, i.e. between an asset’s selling and buying price. This is the method generally preferred by the vast majority of brokers on the market.
Commissions – Some brokers charge them as a percentage of trading volume, based on the value of the asset traded. These are known as DMA (Direct Market Access) CFD brokers. Spreads also apply but are often lower.
Swaps or overnight fees – Finally, most brokers also charge interest on each position the trader decides to keep open overnight.

The Spread, or Bid-Ask Difference

As you’ll have gathered, the broker’s main charge here is the spread: the difference between an asset’s buying price and selling price. As the buying price is slightly above the underlying asset’s real price and the selling price slightly below it, this has certain consequences for investors.

To start making gains, the underlying asset’s price must move a certain number of points in the right direction to offset this gap.

Most of the time, the spread is a small charge on each trade and relatively low, although it can vary with market conditions. It’s also worth comparing the spreads offered by different brokers on the assets you’re interested in, as they can vary greatly from one broker to another.

Be wary of brokers that claim to charge no commission on their clients’ trades but actually make up for it with wider spreads in order to generate at least equivalent profit.

Comparing brokers with and without commission therefore requires investors to consider all the options.
Brokers With Low Spreads

Commissions or Direct Transaction Fees

Another way CFD brokers charge is through commissions, also called “direct transaction fees”. These commissions are common in the sector and consist of applying a percentage fee to each transaction. Most often, it’s 0.1% of the value of the financial instrument concerned, although this commission also varies from broker to broker.

These fees apply both when opening and when closing a position. Note also that traders don’t have to pay this commission when trading stock indices.

Overnight Fees, or Daily Interest on Overnight Positions, in 2026

When you trade CFDs, you pay daily interest, comparable to the interest rate on a loan, whenever a position stays open overnight. These fees are often called “overnight fees”.

This charge is based on a rate known in advance and set by a benchmark interest rate. Remember that CFDs are derivatives traded on the principle of margin lending on the account. The trader only pays part of the underlying asset’s value, and the cost of this loan is represented by the interest rate.

Most often, this rate is fixed at around 2% above a benchmark rate such as Libor.

But note: when the trader opens a short position rather than a long one, notably to profit from a likely fall in the asset’s price, they receive interest on the value of the transaction. Although this interest is relatively small, it isn’t negligible and still increases profits and therefore returns.

Dividend Charges on Stock CFDs

Finally, another form of charge a broker may apply when trading stock CFDs relates to share dividends. It applies when the trader holds a short position on a stock CFD for which a dividend is due.

With this short position, the trader must pay the full cost of the dividend. But if they have a long position, they receive most of the dividend’s value, around 90% of it.

It’s important to understand that a share price often shows strong volatility at the time of the dividend, moving to reflect the payment value as closely as possible. As a result, this dividend charge isn’t really a penalty for the investor.

Brokers’ Additional Services and Fees

In addition to the various commissions and fees we’ve just described, brokers may charge some additional fees depending on the extra services provided to investors. These include:

Inactivity fees – Many brokers charge monthly inactivity fees. They apply when no transaction has been made from the account over a set period (usually one or two years) and the account has a positive balance. The amount is known in advance and varies from broker to broker.
Deposit or withdrawal fees – While fees for depositing capital into a trading account are increasingly rare, brokers do charge fees for withdrawals. Withdrawal fees vary from broker to broker and also depend on the withdrawal method and amount. Under certain conditions, the best brokers may also offer free withdrawals.
Currency conversion fees – Finally, it’s logical that some brokers charge for currency conversion, particularly for trades in assets denominated in foreign currencies or currencies other than your account’s base currency. Again, each broker sets its own fees, so they can vary from one to another.

Can You Trade Without Commission?

Like many investors, you’re probably looking to save as much as possible on the cost of your trades, so you may want to know whether it’s possible to trade without commission. Some brokers do offer commission-free trading accounts for online stock trading.

More and more brokers, such as eToro, have decided to build client loyalty and face increasingly fierce competition by removing commissions and, of course, making up for them through other sources of profit. As we saw above, brokers’ other revenue sources can include deposit or withdrawal fees, interest on margin loans and income from the company’s investment products.

Commission-free stock trading can therefore be advantageous for beginner investors or those without a large trading capital. However, you also need to consider the other fees your broker will charge to make up for the lost income.

Also note that commission-free brokers only offer this benefit up to a certain monthly trading volume. At eToro, for example, you can trade a maximum volume of 100,000 euros per month. Above this threshold, a commission of €0.2 applies to your trades.

How Can Brokers Avoid Charging Commission?

You might also wonder why some brokers can operate without charging commission while others can’t.

To answer this question, you first need to understand that removing commissions is above all a defensive strategy. With the boom in online trading and the sharp increase in offers from many brokers, more and more investors are likely to switch brokers along the way.

It’s also clear that commission-free brokers have found other ways to make money. Remember that brokers don’t earn most of their revenue from transaction commissions, which account for only a small part of their profits.

The ways brokers monetise their role as intermediaries now focus on interest from margin loans, account deposit fees and income from the company’s investment products. But that’s not all!

Many brokers on the market also make money by routing orders to certain market makers. These market makers are counterparties that execute trades and earn money through the spread, i.e. the difference between the bid and ask price, or the price at which they can buy the share and the price at which they sell it to investors.

As the spread represents only a tiny part of the underlying asset’s value (often just a few cents), these market makers make their money on volume. That’s why they pay brokers an attractive financial consideration, a share of their profits, in exchange for their order flow.

What Are the Consequences for Investors?

The recent rise of commission-free stock trading has been seen as a genuinely positive change for investors, especially traders with little experience or limited capital.

The absence of commission on these trades lets you buy small quantities without being ruined by fees. Imagine a share priced at €100: a €6 commission would represent a significant cost. Likewise, if you receive a €50 dividend on a share you hold, paying a commission to invest that money would be unprofitable, and you’d need to sign up for a dividend reinvestment plan (DRIP) that automatically reinvests dividends in the same security that generated them. This would lead you to accumulate cash in order to invest your dividends more profitably.

But that’s not the only advantage of commission-free stock trading. With no such fees on each transaction, investors can invest in several different securities and build a more effective diversification strategy for their portfolio.

Is Commission-Free Trading Worth It in 2026?

Still wondering whether commission-free trading is worth it? Here is a concrete, precise example to help you see more clearly.

Imagine you have €1,000 to invest in the stock market and plan to buy 5 stocks with a commission of around €6.95 per stock, i.e. €35 in total. Imagine also that these investments return 10% a year over time. Paying these commissions means your final investment isn’t €1,000 but €965. After 10 years, your portfolio would be worth €15,400, €55,300 after 20 years and €158,700 after 30 years.

Now imagine you pay no commission on these transactions. In this case, you invest the full €1,000 each time. The difference in your results is real: after 10 years of holding these stocks, you’d have 560 euros more in your portfolio. After 20 years, that’s an extra €2,000, and after 30 years you’ll have gained €5,800.

But be careful! As we’ve pointed out several times in this article, commission-free brokers make their money in other ways, and the calculation above doesn’t take into account other fees that may be charged on your trades. You therefore need to make a precise assessment before choosing your broker and your offer.

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