Imported from previous forum
[ original email was from Michael Whidden - mwhidden@buyandhold.com ]
Note: this question may reveal to the reader that the author is somewhat ignorant about financial matters, but he’s getting better.
Are the Commission and CommType fields primarily intended for use within a company internally, as when a broker desk application might send order to the back-end via FIX, allowing the broker to specify the commission to be charged to the customer?
In what circumstances might a 3rd party buy-side, sending a NewOrder to the sell-side on their own behalf, or on behalf of their client(s), attempt to specify to the sell-side the commission to be charged?
Is CommType "3" (percentage) intending that the commission (5.0 = 5%) be computed as a percentage of the share price?
Thanks,
Mike
[ original email was from Jim Kaye - jim.kaye@gs.com ]
A timely question, given that this was recently raised in the FIX allocations working group. Populating the commission/commission type fields on new order messages would provide a way for buy side firms to communicate a commission rate for the order(s) to the sell side. The recipient sell side firm could then theoretically match the rate to that agreed for the order (or default rate as appropriate). Alternatively, sell side firms could populate the same fields on execution reports allowing the buy side to perform the matching. This latter flow, using an execution report of type ‘calculated’ would perform a very similar role to the block ETC NOE used under the Global OASYS confirmation/matching model.
In answer to your final question, you are correct - percentage commission computation is the norm in many non US markets.
Regards,
Jim.
> Note: this question may reveal to the reader that the author is somewhat ignorant about financial matters, but he’s getting better.
>
> Are the Commission and CommType fields primarily intended for use within a company internally, as when a broker desk application might send order to the back-end via FIX, allowing the broker to specify the commission to be charged to the customer?
>
> In what circumstances might a 3rd party buy-side, sending a NewOrder to the sell-side on their own behalf, or on behalf of their client(s), attempt to specify to the sell-side the commission to be charged?
>
> Is CommType “3” (percentage) intending that the commission (5.0 = 5%) be computed as a percentage of the share price?
>
> Thanks,
> Mike
>