Brennan is from the University of California, Los Angeles, and the London Business School, and Chordia is from the University of California, Los Angeles. Earlier versions of this paper have been presented at seminars at Carnegie-Mellon, Simon Fraser University, Vanderbilt, and the London Business School. We thank participants at these seminars as well as Anat Admati, David Hirshleifer, Hayne Leland, Paul Pfleiderer, Anjan Thakor, René Stulz, the editor, and the referee for helpful comments.
Brokerage Commission Schedules
Article first published online: 30 APR 2012
1993 The American Finance Association
The Journal of Finance
Volume 48, Issue 4, pages 1379–1402, September 1993
How to Cite
BRENNAN, M. J. and CHORDIA, T. (1993), Brokerage Commission Schedules. The Journal of Finance, 48: 1379–1402. doi: 10.1111/j.1540-6261.1993.tb04758.x
- Issue published online: 30 APR 2012
- Article first published online: 30 APR 2012
It is generally optimal for risk-sharing reasons to base a charge for information on the signal realization. When this is not possible, a charge based on the amount of trading, a brokerage commission, may be a good alternative. The optimal brokerage commission schedule is derived for a risk-neutral information seller faced with risk-averse purchasers who may differ in their risk aversion. Revenues from the brokerage commission are compared with those from a fixed charge for information and the optimal mutual fund management fee.