Tiered Commission

A tiered commission is a pricing schedule in which the rate charged per lot falls as a client's traded volume rises, usually measured over a calendar month or a rolling period. An account starts on the standard rate and moves into a lower band once volume passes each threshold; depending on the schedule, the better rate applies only to subsequent trading or retroactively to the whole period. Active-trader and institutional programmes commonly use this structure, sometimes combined with volume rebates. Tiered pricing rewards turnover, which is worth keeping in mind: a schedule that makes trading cheaper can encourage extra activity that outweighs the saving, so the benefit is real only for volume a trader would have produced anyway.