What is a Brokerage Trade Confirmation?

What is a Brokerage Trade Confirmation explained by professional Forex trading experts the “ForexSQ” FX trading team. 

What is a Brokerage Trade Confirmation?

Trade Confirmation Definition and Explanation for New Investors

Thanks to SEC=mandated and other regulatory requirements, when you begin placing trades through your brokerage account with your new stock broker, you will get something known as a trade confirmation.  This trade confirmation will be mailed to you or, if you’ve opted for paperless delivery, made available to you in some downloadable format such as Adobe PDF, whenever your broker executes a buy or sell order for you.

 Depending upon your brokerage firm or broker, the information on a trade confirmation will vary, but there are a few things that are included on almost all of them.

The Things You Might Find on a Brokerage Trade Confirmation

  • The name of the investment you traded, along with the ticker symbol
  • Total shares bought or sold
  • The cost or selling price per share
  • The commission paid to the brokerage firm (depending upon the specifics, if your broker was acting for you in a dealer capacity, you may see bond spreads on fixed income securities)
  • The trade execution date, which shows when the trade was placed
  • The settlement date, which is the day the money and investment, such as shares of stock, transfers (if you have your purchases or sales settled against a bank account, this is the date the money will be taken out of or deposited into your account)
  • The total gross value of the transaction
  • The total net value of the transaction after deducting brokerage commissions
  • The account number in which the trade was placed
  • The type of order that was used; e.g., a market order, limit order, et cetera.

Why You Should Examine Your Broker’s Trade Confirmations Carefully

The trade confirmation is extremely important because it is your way of verifying that the broker has filled an order according to your instructions (there are twelve different types of stock trades a typical investor might place with his or her stock broker).

 If you notice that the trade confirmation includes information on it that you believe is in error, you must contact your bank or broker immediately to attempt to get it corrected.

It is highly recommended that you keep accurate copies of all of your trade confirmations.  Those trade confirmations will prove to be extremely useful when it comes time to filing your taxes; tracking capital gains and losses will be much simpler, and if you are ever audited you will have the necessary documentation, though recent changes in the way cost basis accounting is done for the IRS make the custodian records the official tax records.

Your Investment Advisor Might Have Copies of Your Trade Confirmations

If you work with a Registered Investment Advisor, the individual advisor representative overseeing your portfolio may have copies of your trade confirmations, or be able to get them for you, though it’s still best to maintain your own records.  You can also use these trade confirmations to reconcile the statement from your custodian with the statement from your advisor so you and your accountants, attorneys, or private bankers can better audit the activity in your individually managed account.

Finally, the trade confirmations themselves should match the activity summary on your account statement from the broker or custodian, too; everything from the exact share count to the precise commission and, if available, your instructions for whether or not you want the dividend reinvested automatically.

 If push comes to shove, you can recreate the details of your trades from the information found on your account statements, which is one of the reasons it is important to review those account statements for accuracy, too.

To learn more about stock brokers, brokerage accounts, broker trade confirmations, full service brokers versus discount brokers, investment advisors, and much, much more, check out the New Investor’s Complete Guide to Brokers, which will link you to many more articles and essays I’ve written on these and other, related, topics.  It can be a great way to gain an introductory understanding of some of these concepts.

What is a Brokerage Trade Confirmation Conclusion

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