Minimum broker commission: the per-trade floor and the monthly fee — what is the difference

The minimum broker commission is the lower limit on the fee for an executed order: the tariff charges either a percentage of the trade's turnover or a fixed floor, whichever is greater. As long as the order is large, the floor does not come into play and you pay the percentage rate. Once the trade's turnover becomes small, the percentage falls below the floor, and the floor is what gets charged. That is why the effective rate on a small order ends up higher than the one quoted in the tariff, and the smaller the amount, the bigger the gap. This is not a hidden charge but a direct consequence of the "percentage or minimum, whichever is greater" formula.

How the calculation works

A tariff almost always lists two things side by side: a rate as a percentage of the trade value and a minimum amount per trade. The broker calculates the percentage, compares it with the floor and charges the larger of the two. This gives a simple rule: the order size at which the percentage catches up with the floor is the threshold below which trading in small lots does not pay. You can work it out yourself by dividing the minimum by the rate in the current tariff. This article contains no specific rates and cannot contain them: they are published by the broker itself, not by the platform.

A separate question is what the tariff counts as a "trade". An order filled in parts over the course of a day is treated differently by different brokers: some apply the floor to the day's turnover in the instrument, others to each individual fill. The difference between these approaches becomes noticeable precisely with small regular purchases, when partial fills come in a steady stream. The answer is always in the tariff and in the broker's report: the report shows how many commission lines correspond to a single order of yours.

What gets confused with the minimum commission

Three payments sit next to each other in a tariff and easily merge in investors' minds into a single "commission".

The broker's commission is the fee paid to the intermediary for executing your order. This is the charge that can have a per-trade minimum.

The subscription fee is a fixed monthly amount that is charged whether or not you traded, although sometimes it is charged only in months with turnover. It is not a minimum commission: it is not tied to a trade and is not compared with a percentage.

The custody fee is the charge for holding securities on record in the account, usually monthly and often with its own minimum. For a portfolio that simply sits there, it can turn out to be the main expense, while the per-trade minimum never arises at all.

On top of this, the bill includes the exchange fee, which the broker passes on to the client; some tariffs build it into the overall rate, others show it as a separate line. Nor should any of the above be confused with the management fee: that applies to discretionary management and funds, not to trades you make yourself on the stock market.

Who the floor hurts and who can ignore it

The per-trade minimum hits three scenarios: regular small top-ups bit by bit, building a position in fractional parts, and a portfolio of many securities that you rebalance often and in small amounts. In each of these cases the floor turns a percentage-based tariff into a fee for the mere act of placing an order with the broker.

The floor does not matter to those who buy rarely and in large amounts, or to those who hold securities for a long time. For them, what counts are the custody and subscription lines, the rate on margin rollovers, the minimum margin and infrastructure costs such as transferring securities between brokers when switching intermediaries. Comparing brokers on the minimum figure alone is as much a mistake as choosing one by its name: the order of checks is set out in the article how to choose a broker.

How to check your own case

Step 1. Take the current tariff and write down the rate, the per-trade floor and the rule for what the floor applies to: the order, the fill or the day's turnover in the instrument.

Step 2. Calculate the threshold order size at which the percentage equals the minimum. Below that size, your actual rate goes up.

Step 3. Check the calculation against last month's statement: add up all the commission lines and divide by the actual turnover. The resulting figure is what you really pay, and it is almost always higher than the tariff rate.

What the minimum commission does not cover

The per-trade floor has nothing to do with taxes: the personal income tax base is calculated separately, and commissions are counted in it as expenses, not as part of the security's price. It does not protect against infrastructure risks, which are handled by other mechanisms, including account insurance. Nor does it affect your rights as a holder of the security: voting through a broker, receiving payments according to the dividend calendar and coupons on OFZ bonds all work regardless of which tariff you have chosen.