Explicit Commission refers to a transparent, directly stated fee charged by a broker or trading platform for executing a transaction, distinctly separated from the price of the underlying asset.
Mechanism
This fee is calculated and applied at the point of trade execution, often presented as a fixed dollar amount per trade, a percentage of the transaction value, or a per-unit charge for the asset traded. The mechanism ensures clear identification of the service cost.
Methodology
The strategic application of explicit commissions aims to provide transparency in pricing for institutional clients, allowing for precise calculation of transaction costs and performance attribution. It contrasts with implicit costs like bid-ask spreads, fostering a clear cost structure in crypto request-for-quote (RFQ) and options trading environments.
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