Tag Archives | commission

Proprietary Trading

Proprietary Trading Definition

Proprietary trading definition is the act of companies profiting directly from the market rather than working on a commission basis. Several companies who have a competitive advantage in an area of trade often do this.

Proprietary Trading Meaning

Larger companies who have expertise in a certain market usually perform proprietary trading. For example, an energy company will have extensive knowledge of how oil and gas will be traded. These companies use this advantage to their benefit. It can however get out of hand when a large company has the ability to manipulate the trading amounts. For example, Enron exuberated too much control over the trading energy numbers. If done correctly, then proprietary trading can provide major benefits to a company and provide some well made profits over time.


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proprietary trading definition

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proprietary trading definition

See Also:
Exchange Traded Funds
Currency Exchange Rates
How to Select Your Commercial Insurance Broker
Capital Gains
Credit Rating Agencies

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Primary Market

See Also:
Investment Banks
Initial Public Offering (IPO)
Secondary Market
Securities Act of 1933
Securities Exchange Act of 1934

Primary Market Definition

The Primary Market is where the issuance of new or original securities occur. Furthermore, these securities can range from the debentures to newly issued stocks.

Primary Market Meaning

Primary markets are typically not what the typical investor gets involved in. In fact, often times these markets are only available to selected investors. The Securities Act of 1933 regulate the primary market to ensure that all of the securities have the proper amount of information associated. Often times, they involve Initial Public Offerings or IPOs. Investment bankers bring these IPOs to the market. They will either buy the stock beforehand and sell it in the market at a profit, or they will simply sell the shares into the market and take a commission. The former is usually true for primary market stocks. Offer the stocks to very few investors that gather during “road shows” put on by investment bankers. Debentures are often done in the same way through investment bankers.

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Primary Market, Primary Market Definition

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Primary Market, Primary Market Definition

 

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Commission Accounting

See Also:
Accounting Principles
Accounting Concepts
Income Statement
Accrual Based Accounting
Payroll Accounting

Commission Accounting Definition

Commission Accounting can easily be defined as a revenue or expense to the company during the process of a sale. Typically this type of accounting is used for real estate firms who work off of commission or a similar type of sales company. The expense side of accounting can be based off of pay to employees which would be the amount of commission each employee makes off of a sale. Typically, there is a percentage amount that a company or person receives upon the receipt of a sale. However, some companies have been known to accept or pay their employees a fixed amount based off each individual sale. The policies are individual to each company and it is up to each customer or employee to find the exact terms of the agreement.

Commission Accounting Example

Frank works at Blimp Real Estate Co. and has been hired by Growing Fast Inc. to search out and find land to build on, or a suitable building in which Growing Fast can move into for its expansion. First, Frank explains to the company that the commission for either is 5% of the costs. Frank has the perfect building in mind in downtown Houston, Texas. Growing Fast is impressed with the place and decides that they will in fact buy the building. Frank then sets up the contract between the buyer and the owner of the building. The final price is set for $20 million, thus Blimp Real Estate receives $1 million in commission revenue. However, Blimp also has a commission expense to record because Frank has an incentive package stating that he receives 10% of the commission on each sale. Therefore, Frank will receive $100,000 for the sale.

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commission accounting

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Commercial Agents

See Also:
How to Select Your Commercial Insurance Broker
Proforma Invoice Example
PEO or Outsource Payroll

Commercial Agents

Commercial agents are individuals, who may be part of a commercial agency, hired by a company to represent one or more principals within an organization. Typically, they will seek out and acquire business on behalf of his principals. Furthermore, they are generally compensated based on a percentage of the sales revenue. A commercial agency contract predetermines their commission amount in a commercial agency contract executed by both parties.

Commercial Agency Contract

A commercial agency contract is a written agreement that defines the relationship between an agent and his principals. The commercial agency agreement will outline the obligations, interests and authority levels authorized to the agent. Furthermore, commercial agents may require a certain level of management by the principals. This is to ensure an agent represents the principal’s best interests in each transaction.

Commercial Agents Law

This law protects the agents and the principals in the contractual relationship when there is a breach in the commercial agency agreement. For example, a commercial agents’ breach can release the principal from obligations outlined in the commercial agency contract. You can enforce the commercial agency agreement in recognized law if contractual issues arise between the entities.

commercial agents

 

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