Brokerage commissions are the fees a broker charges to execute a trade on your behalf, and at most major firms the base commission on online stock and ETF trades is now $0. That doesn’t mean trading is free. Options carry per-contract charges, mutual funds carry sales loads, bonds carry markups, advisors charge a percentage of your assets each year, and small regulatory fees ride along on every sale. Some brokers also earn revenue by routing your orders to wholesale market makers who pay for the privilege.
Where Commissions Went After 2019
The industry moved to zero-commission online stock and ETF trades around 2019. Schwab, Fidelity, E-Trade, and Robinhood all charge $0 for those basic trades. The revenue brokers used to collect on each ticket didn’t disappear from the business; it shifted to other products and to indirect channels. Options contracts still carry a per-contract fee. Mutual funds still carry loads. Bonds still carry markups. And brokers that route retail order flow to wholesale market makers get paid for doing so.
So the honest answer to “what will I pay?” depends less on the headline commission and more on what you’re actually trading and how your broker is compensated.
How Brokers Charge for Trades
Per-Share Pricing
Some brokers price by the share rather than by the trade. Interactive Brokers offers a tiered plan starting at $0.005 per share with a $1.00 minimum per order.1Interactive Brokers. Commissions and Fees Fifty shares at that rate hits the $1.00 floor. A trade of tens of thousands of low-priced shares gets expensive fast.
Options Per-Contract Fees
Options are where “commission-free” platforms still collect real money. The standard charge at most major discount brokers is $0.65 per contract. Ten contracts cost $6.50 to open and another $6.50 to close. High-volume traders can access tiered pricing that drops as low as $0.15 per contract.2Interactive Brokers. Options Commissions Exercise and assignment fees vary; some brokers charge nothing, others charge a separate fee.
Percentage-of-Assets Fees
If you work with an advisor at a full-service firm or use a robo-advisor, the charge usually isn’t per trade. It’s an annual percentage of your portfolio value, commonly between 0.5% and 1.5%, deducted directly from the account (often quarterly). On a $500,000 portfolio at 1%, that’s $5,000 a year whether your investments gained or lost. Because the fee scales with your balance, an investor who agreed to a $2,000 annual charge at the start could be paying $8,000 a decade later without ever signing a new agreement.
Mutual Fund Loads and 12b-1 Fees
Mutual funds carry commission-like costs that don’t show up in the same place as stock trading fees. A front-end sales load is deducted from your investment at purchase to compensate the selling broker.3Investor.gov. Front-end Sales Load Put $10,000 into a fund with a 5% front-end load and only $9,500 actually buys shares.
Back-end loads, also called contingent deferred sales charges, work in reverse: nothing at purchase, but a fee if you sell within a certain number of years. The charge typically declines over time and eventually disappears.
The subtler cost is the 12b-1 fee, an annual charge pulled from the fund’s assets to cover distribution and marketing. It’s baked into the fund’s expense ratio rather than shown as a separate line item, so many investors never realize they’re paying it. No-load and index funds generally avoid or minimize these charges.
Regulatory Fees Passed Through to You
Even on a “free” trade, small regulatory fees may appear on your confirmation. The SEC charges a Section 31 transaction fee on sales of securities. As of April 4, 2026, the rate is $20.60 per million dollars in sales proceeds.4U.S. Securities and Exchange Commission. Section 31 Transaction Fee Rate Advisory for Fiscal Year 2026 A $10,000 sell order works out to roughly $0.21. The fee applies only to sales, not purchases, and the SEC adjusts it periodically.
FINRA also assesses a Trading Activity Fee on sell transactions, currently $0.000145 per share, capped at $7.27 per trade. Brokers typically bundle these into one line labeled “transaction fees” or “regulatory fees.” They are separate from the broker’s own commission.
Payment for Order Flow
Zero commissions did not eliminate the broker’s revenue from your trades. When you place a market order through a discount broker, the broker often routes that order to a wholesale market maker rather than directly to an exchange. The market maker pays the broker for filling the order. This is payment for order flow, and it is how many brokerages replaced the commissions they stopped charging.
The arrangement is contested. Supporters argue that wholesale market makers give retail investors slightly better prices than exchanges would (called price improvement). Critics note that brokers have a financial incentive to route to whichever venue pays the most, which is not always the venue that delivers the best execution. Research has associated higher payment-for-order-flow rates with worse price outcomes for investors.
SEC Rule 606 requires brokers to publish quarterly reports on where they route customer orders and what payments they receive from each venue.5U.S. Securities and Exchange Commission. Responses to Frequently Asked Questions Concerning Rule 606 of Regulation NMS The reports must describe the terms of any payment-for-order-flow arrangements and remain publicly available on the broker’s website for three years. If you place “not held” orders, you can also request a customer-specific report covering the prior six months of routing and execution data for your own orders.
What Your Broker Must Disclose
Form CRS Before You Open the Account
Before a broker places your first order or opens your account, the SEC requires delivery of Form CRS, the Client Relationship Summary.6U.S. Securities and Exchange Commission. Form CRS Relationship Summary This standardized two-page form summarizes the services offered, the principal fees and costs you’ll incur, and the conflicts of interest that could influence the firm’s recommendations. The format is identical across firms, which makes side-by-side comparison possible. The SEC has emphasized that Form CRS is meant to function as disclosure, not marketing material, and firms must update and redeliver it when material changes occur.7U.S. Securities and Exchange Commission. Frequently Asked Questions on Form CRS Read it before clicking through account setup.
Regulation Best Interest for Recommendations
When a broker-dealer recommends a specific security, account type, or strategy, Regulation Best Interest requires that the recommendation be in the retail customer’s best interest. Under Reg BI, the broker must disclose all material facts about the scope and terms of the relationship, including conflicts created by compensation arrangements like commissions and payment for order flow. The SEC has specifically warned that using the word “may” to describe a conflict that actually exists can be misleading.8Securities and Exchange Commission. Commission Interpretation Regarding Standard of Conduct for Investment Advisers
Trade Confirmations
After every trade, your broker must send a written confirmation at or before completion of the transaction. SEC Rule 10b-10 specifies what it must contain: the date and time, the security’s identity and price, the number of shares, and whether the broker acted as your agent or traded from its own inventory as principal.9eCFR. 17 CFR 240.10b-10 – Confirmation of Transactions When the broker acts as agent, the confirmation must state the commission amount. When the broker acts as principal, it must disclose the markup or markdown instead. The confirmation must also state whether the broker receives payment for order flow on the transaction.
Bond trades add another layer. FINRA Rule 2232 requires brokers to disclose the markup or markdown as both a dollar amount and a percentage on trades with non-institutional customers in corporate and agency debt securities, along with the time of execution expressed to the second.10FINRA. Fixed Income Confirmation Disclosure: Frequently Asked Questions Bond pricing has historically been less transparent than stock pricing, and this rule gives retail bond investors visibility into the spread their broker earns.
How Commissions Affect Your Taxes
Commissions you pay when buying a security aren’t just gone. The IRS treats them as part of your cost basis, the total amount you’re considered to have invested.11Internal Revenue Service. Topic No. 703, Basis of Assets A higher basis means a smaller taxable gain (or a larger deductible loss) when you sell. Commissions paid at sale reduce your net proceeds and deliver the same tax benefit from the other side. With zero commissions on stocks, this matters less for equity trades and more for mutual fund loads, bond markups, and options contract fees.
Annual advisory fees are different. Before 2018, investors could deduct them as miscellaneous itemized deductions. The Tax Cuts and Jobs Act suspended that deduction starting in 2018, and later legislation made the elimination permanent. Advisory fees now come entirely out of your after-tax returns, with no federal offset.
When the Commission Actually Comes Out
The commission is calculated the instant your order fills, and your available buying power drops right away, but the official transfer of money and securities happens at settlement. Under SEC Rule 15c6-1, most securities settle T+1, one business day after the trade date.12eCFR. 17 CFR 240.15c6-1 – Settlement Cycle Buy Monday, ownership and payment clear Tuesday. The commission is formally deducted from your cash balance as part of that final reconciliation.
Good Faith Violations in Cash Accounts
The settlement timeline creates a trap for active traders in cash accounts. If you buy a security and then sell it before the original purchase settles with fully paid funds, the broker may flag the transaction as a good faith violation. You sold something you hadn’t actually paid for yet, which looks like a credit transaction even in a cash account. Three good faith violations within a 12-month period typically result in a 90-day restriction, during which you can only buy with settled cash already on hand. Keeping enough settled funds in the account before placing a new trade is the simplest way to avoid the problem.