Costs of Trading Securities

What this video covers

• Why a commission and a markup are mutually exclusive on the exact same trade, and how to identify whether a transaction is agency or principal based on the cost type
• What FINRA's 5% markup policy actually is: a flexible guideline, not a hard ceiling, with factors that justify higher or lower markups
• The municipal securities exclusion from the 5% policy, and which regulator governs fair pricing for munis instead
• How the bid-ask spread functions as an implicit cost, and why a round-trip trade at unchanged quotes loses exactly one full spread total
• Payment for order flow as a conflict of interest that must be disclosed to clients
• The best execution obligation under FINRA's rule, including the factors beyond price that determine whether a firm met its duty
• Why best execution applies to both principal and agency transactions, and how the exam baits you into limiting it to agency trades only