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).
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.
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.
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.
