What Is a Brokerage Trade Confirmation?
Definition & Examples of Brokerage Trade Confirmation
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 and 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 and how you can use it to monitor your brokerage 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. The information on a trade confirmation can vary, but common information includes:
- Name of the investment traded, along with the ticker symbol
- Total shares bought or sold
- Cost or selling price per share
- Commission paid to the brokerage firm (if your broker was acting for you in a dealer capacity, may include bond spreads on fixed income securities)
- Trade execution date (when the trade was placed)
- Settlement date (when the money and investment transferred)
- Total gross value of the transaction
- Total net value of the transaction after deducting brokerage commissions
- Account number in which the trade was placed
- Type of order that was used (market order, limit order, et cetera.)
- Capacity in which the broker acted (broker, dealer, or agent)
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. 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 made available to you in an electronic format whenever your broker executes a trade for you.
Alternate names: confirmation statement, trade confirmation statement
How a Brokerage Trade Confirmation Works
Brokerage trade confirmations are informational tools. They should be used in conjunction with the brokerage account statement to verify transactions and fees.
Understanding your brokerage trade confirmations can also help you examine the details of each trade that goes through your account, allowing 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 brokerage 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 doesn'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
If the brokerage sold you a security or bond they had purchased previously, they are acting as a principal and are benefitting from the transaction by marking prices up or down. These are commission equivalent charges and must be disclosed.
If you find inconsistencies between your confirmations and your statements or find issues with tax information sent by your brokerage, start by contacting your brokerage to discuss your concerns.
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.
If the brokerage is uncooperative or you suspect unethical behavior on their part, there are agencies that can help.
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.
Get Help from the SEC
The Securities and Exchange Commission is the regulatory authority for financial trading. You can file complaints with them or find official answers to investing questions.
Do I 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 necessary documentation to back up your tax filings.
However, the cost basis accounting method used by the IRS makes the custodian records the official tax records, as 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 examine your brokerage trade confirmations as soon as you receive them, then resolve any differences as soon as you can.
- 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 completed, including 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 or inaccurate information, and identify potentially unethical behavior on the part of your brokerage.