Brokerage fees: these are the charges an online broker deducts on one or more transactions. A broker is an agent or an organization that connects buyers and sellers on a stock market. Thinking of investing in stocks? Here is everything you need to know about brokerage fees.
Brokerage Fees: What Are the Different Trading Fees?
- Commission fees or spreads;
- Brokerage fees;
- Custody fees;
- Closing fees;
- Other commissions.
Talking about online brokerage fees means talking about the various financial charges that traders or investors may have to bear. These fees are numerous and of different kinds. They include the direct costs the trader pays, as well as indirect fees that may be charged in the form of a subscription. These fees have a direct impact on the trader’s profits: the higher they are, the less profit the trader or investor makes. It is important to know these fees before you start investing in the stock market.
Commission Fees and Spreads
These are the fees the broker charges directly on an open position. Spreads vary from one broker to another and are applied to trading positions. They are therefore only the fees brokers apply for speculation or CFD trading. Commission fees can be variable or fixed depending on the broker or the type of position opened. Variable Spreads and Fixed Spreads:
- Variable spreads are spreads that can change as the size of the position evolves. They may be charged based on the profits the trader makes or on the amount invested.
- Spreads are fixed charges when the amount is set and known in advance. The trader can estimate the net amount they will pay on a position before even opening it. This is the preferred approach, because it lets you know what a position will cost before opening it.
Brokerage Fees on Stock Market Investments
Brokerage fees are always spreads, but the ones applied by online brokers. Brokerage fees are charged on direct investments in the stock market. This can be the purchase of a stock, an investment in ETFs, or futures contracts. Unlike trading, we are talking here about fees on stock market investments.
- Custody Fees – Custody fees are fees brokers charge on long positions. These can be positions held for more than a day, or positions still open after midnight. Swaps or roll-overs are the usual terms for custody fees. Once again, the amount is not fixed and varies from one broker to another and from one product to another. Swaps will be higher on cryptocurrencies than on currencies, and even higher on products like gold than on stocks, indices or other commodities.
- Closing Fees – Closing fees are fees some brokers charge for closing trading accounts. Account closing fees are not applied on every platform; some do it specifically. The amount is not standard: it all depends on the broker’s internal policy.
Other Brokerage Fees to Know
Beyond the fees listed above, which fall into the category of direct fees, there are also indirect or general fees that the trader may have to bear. These include:
- Financial Transaction Taxes. These fees are added to custody fees and withdrawal fees. They represent 0.30% of the amount of the stock market transaction. They apply when the stock purchased is that of a company listed in France, and the company must also have a market capitalization of more than €1 billion.
- Fees for the deferred settlement service (SRD). The SRD allows investors to take long or short positions on listed securities. Like leverage, it can amplify gains, but also losses when used poorly. These are services offered to investors to defer the delivery of certain securities. These services are billed through additional fees, separate from the usual fees.
- Special fees on the PEA. Article D221-111-1 of the French Monetary and Financial Code, created by decree n°2020-95 of 5 February 2020, provides that from 1 July 2020, the opening, account maintenance, transaction and transfer fees on PEA and PEA-PME plans are capped. Decree n° 2025-925 of 13 July 2025 extends the cap to transaction fees on unlisted securities.
How Much Are Brokerage Fees in France?
Brokerage fees vary from one market to another and according to the assets traded on that market. From one market to another, or from one product to another, trading conditions cannot be the same. There are always specific conditions that directly influence brokerage fees.
How Brokerage Fees Vary by Stock Exchange
- The brokerage fees applied on Euronext are not the same as those applied on other foreign stock exchanges. Outside France and the other Euronext countries, brokerage fees are much higher.
- On the US market, for example, studies conducted by the financial market authorities showed that brokerage fees were almost twice as expensive as those applied in France. For a €5,000 position, for example, €15 is charged to the trader. That amount is twice what is charged on Euronext.
- The policy will likewise be specific on other market places such as the Shanghai Stock Exchange, the Sydney Stock Exchange or the London Stock Exchange.
How Brokerage Fees Vary by Asset Class
These brokers do not charge commissions on these two financial assets, which encourages traders to open positions. Other brokers apply a fixed fee and commission policy regardless of the product concerned. You will therefore find brokers where you pay the same amount whatever the position opened. Some brokers run a single-tariff policy and charge a standard €1 per transaction.
Brokerage Fees: How to Reduce Trading Fees
The pricing policy as we know it is not set in stone. There are always ways to get around these rates and pay less than the expected fees. To reduce trading fees, traders can adopt the following practices:
- Limit the Number of Orders to Reduce Order Fees – The number of orders per day can influence traders’ earnings. Indeed, the higher the number of transactions, the higher the fees. If we follow the logic of fixed fees, as long as the trader opens positions, they will pay fees of the same amount. Other brokers favor traders who appear more active to them. Some brokers offer exceptional conditions for traders, such as flat-rate packages, for example. With these offers, the most active traders could benefit from a reduced rate.
- Choose Online Brokers Instead of Banks to Reduce Broker Costs – As we have seen, the pricing policy of banks is more aggressive than that of online brokers. A savvy trader should, for now, choose an online broker. It should not be forgotten that banks may still find a way to optimize their rates so as to compete with online brokers. The choice of broker can also be made according to the trader’s needs.
- Avoid Placing Orders by Phone – A study conducted by the financial market authorities showed that for a €1,000 order, the trader pays €8 with an online broker, €14 for stock market transactions placed by phone, and €19 at a bank. With this observation, it is clearly better to place orders online yourself on a dedicated platform. Once again, banks rank first when it comes to hefty fees.
What Are the Tax Rules on Brokerage Fees in France?
Stock market income is subject to a tax levy that varies from one market to another and from one country to another. The rules in France are the same as in the geographic area covered by Euronext. On this market, traders and investors are subject to a single flat-rate levy. The rate of social contributions was revised in 2018 to 17.20%, previously 15.50%. This levy can vary under specific conditions.
Brokerage Fees in France: Composition of the Flat Tax (PFU)
The prélèvement forfaitaire unique (PFU) is a levy in force since 2018. It is a financial innovation introduced under Emmanuel Macron’s term in office. This levy consists of an income tax at a rate of 12.8% and social contributions at a rate of 17.2%. It mainly applies to dividends received by shareholders.
Special Tax Rules on the PEA
Special rules have applied to the PEA (Plan d’Épargne en Actions, the French share savings plan) for some time, the aim being to encourage investors to hold positions for longer.
Stocks held for more than 5 years are exempt from any levy. For shares held during the first two years, a levy of 39.7% applies, social contributions included. Between 2 and 5 years, the broker withholds 36.2%, social contributions included. Only from 5 years onwards is the investor fully exempt from these levies.
Why Compare Brokerage Fees?
As we saw above, brokerage fees vary from one platform to another and from one product to another. Making a comparison helps you single out the stock broker with the best offer, so you can optimize your earnings. The higher the fees charged by a broker, the less profit the trader will make.
When Are Brokerage Fees Charged?
They are charged by banks or online brokers for any operation, such as putting buyers and sellers in contact, executing the trade and all related services. Brokerage fees can be flat, proportional to the amount of the transactions carried out, or both.
How Do You Calculate Stock Market Fees?
If you buy 500 Carrefour shares at 13.1 euros per share, the amount of your order will be 500 * 13.1, i.e. €6,550. The brokerage fees will therefore be: (500 * 13.1) * 0.005 = €32.75.
How Do Brokerage Fees Work?
Brokerage fees are fees charged by stock market intermediaries when securities are bought or sold. Generally, these fees are calculated in proportion to the amount of the order placed and work out at around 0.5% for French stocks.
What Is a Spread?
The spread is the difference between the buying price and the selling price of an asset. Brokers set the prices of products on the basis of underlying assets and CFDs.
This article is for educational purposes only and does not constitute investment advice. Investing involves a risk of capital loss.