What Is a Brokerage Trade Confirmation?

Definition & Examples of Brokerage Trade Confirmation

Definition

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.

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Definition and Example 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; it is separate from your account statements. It can be used to check for broker fraud, resolve account discrepancies, and support your tax filing.

  • Alternate names: confirmation statement, trade confirmation statement

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 number of the account in which the trade was placed.
  • The type of order that was used (e.g., market order, limit order).
  • 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.

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. That 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. That 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 that it had bought previously, it acted as a principal. That means it benefited 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? 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 if you suspect unethical behavior on its 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 who 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 the list of banned brokers. You can also contact the agency with regulatory or other questions.

Get Help from the SEC

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

What It Means for Individual Investors

Brokerage trade confirmations are a tool that helps you keep your finances in order and check for discrepancies in your accounts, which is especially important at tax time.

Trade confirmations can be used when filing your taxes to help track capital gains and losses. 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. 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 that includes what was traded, the date of the trade, the cost of trade, the 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.
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Sources
The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. U.S. Securities and Exchange Commission. "Investor Bulletin: How to Read Confirmation Statements."

  2. FINRA. "Cost Basis Basics—Here's What You Need to Know."

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