What Is a Brokerage Trade Confirmation?

Definition & Examples of Brokerage Trade Confirmation

Female stock broker speaking on a headset while working at a computer
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A brokerage trade confirmation is a financial document that reports the details of a trade completed through your account. It is issued by your brokerage after each trade; it is separate from your account statements. It can be used to check for broker fraud, resolve account discrepancies, and support your tax filing.

Learn what is included in a brokerage trade confirmation. Also, find out how you can use it to monitor your account.

What Is a Brokerage Trade Confirmation?

When you place trades through a brokerage account, you will receive a report known as a brokerage trade confirmation. This is a detailed record of the trade completed. While trade confirmations can vary, they often includes:

  • The name of the investment traded, along with the ticker symbol.
  • The total shares bought or sold.
  • The cost or selling price per share.
  • The commission paid to the brokerage firm. (If your broker was acting for you in a dealer capacity, it may include bond spreads on fixed income securities.)
  • The trade execution date (when the trade was placed).
  • The settlement date (when the money and investment transferred).
  • The total gross value of the transaction.
  • The total net value after deducting commissions.
  • The account number in which the trade was placed.
  • The type of order that was used (market order, limit order, etc.).
  • The role in which the broker acted (broker, dealer, or agent).

Note

If you have your purchases or sales settled against a bank account, this is the date the money will be taken out of or put into your account. If you have your assets in a brokerage account, you'll see the transactions made in that account the same day of the trade.

Your brokerage trade confirmation will be mailed or sent electronically each time your broker executes a trade for you.

Alternate names: confirmation statement, trade confirmation statement

How Does a Brokerage Trade Confirmation Work?

Trade confirmations are informational tools. They should be used along with the brokerage account statement to verify transactions and fees.

Knowing how to use these confirmations can also help you look closely at the details of each trade that goes through your account. This allows you to:

  • Keep accurate records for tax time.
  • Verify that the broker has filled an order according to your instructions.
  • Spot errors or inaccurate information.

Each time you receive an account statement, you should compare it with your trade confirmations from that time period. This can help you identify potentially unethical behavior on the part of your brokerage, such as:

  • Information on trade confirmations that don't match account statements.
  • Unexplained fees.
  • Fees that are higher than they should be.
  • Undisclosed commissions when your broker acted as an agent in trades.

Important

If the brokerage sold you a security or bond they had bought previously, they are acting as a principal. That means they are benefitting from the transaction by marking prices up or down. These are commission equivalent charges and must be disclosed.

What should you do if you find inconsistencies between your confirmations and your statements? Or what if you find issues with tax information sent by your brokerage? In that case, start by contacting your brokerage to discuss your concerns.

If the brokerage is uncooperative or you suspect unethical behavior on their part, there are agencies that can help.

Tip

If you bring up any concerns with your broker, keep notes of your conversations and actions for future reference. These can be useful if you later need to file a complaint.

Get Help from FINRA

The Financial Institution Regulatory Authority (FINRA) exists to help investors and consumers that have been taken advantage of by predatory financial firms. FINRA provides an online complaint center, guidance on common financial fraud tactics to look out for, and dispute resolution services.

Before choosing a broker, you may also want to use FINRA's broker checking tool and view their list of banned brokers. You can also contact the agency with regulatory or other questions.

Get Help from the SEC

The Securities and Exchange Commission (SEC) is the regulatory authority for financial trading. You can file complaints with them. You can also find answers to investing questions.

Do You Need Brokerage Trade Confirmations?

Brokerage trade confirmations are a tool that helps you keep your finances in order and check for discrepancies in your accounts. This is especially important when tax time rolls around.

Trade confirmations can be used when filing your taxes to help track capital gains and losses will be much simpler. If you are ever audited, they can serve as documentation to back up your tax filings.

The cost basis accounting method used by the IRS makes the custodian record the official tax records; they are required to report an adjusted basis and any gains or losses. This means that if there are disparities between your records and the ones kept issued by your brokerage, the IRS will use the brokerage records.

To prevent issues around tax time, you should take a look at your brokerage trade confirmations as soon as you receive them. Then, resolve any problems as soon as you can.

Key Takeaways

  • A brokerage trade confirmation is a financial document that reports the details of a trade completed through your account.
  • It is a detailed record of the trade includes what was traded; date of the trade; cost; net value; any commissions or fees that your broker charged; and more.
  • Brokerage trade confirmations can help you keep accurate records for tax time; verify transactions; spot errors; and identify potentially unethical behavior on the part of your brokerage.