How and why read broker report

Not all brokers adapted their reports for the mass reader, there are many special information in them, and it can scare the novice. We tell me how and why you need to read the brokerage report and that you can skip it.

The report contains detailed information about the balances of money and securities on the brokerage account, as well as the history of the assets for the selected period: purchases, sales, calculation of dividends and coupon income, the write-off of the broker commissions, exchange and depositary, taxes — each transaction with all the details.

Although the Broker according to the law is obliged to report to clients, there is no single form for this document. Each company has its own template — and they can be very different.

As a rule, this is a table on multiple pages in Excel or PDF format. If the broker sends a report to the customer’s mail, then you can independently form it on the website or in the application.

The report header contains information about the brokerage account: Owner’s name, the number of the contract for the provision of brokerage services, the course of foreign currency at the beginning and end of the reporting period (if there is a currency), the date of the report formation and so on.

As a rule, at the beginning of the report there is a summary table in which you can find amounts for the main categories:

Review information is placed on the first page. All the rest of the report occupy more detailed tables in four blocks:

On some concepts that are found in the reports of brokers, it is worth stopping separately.

The history of operations can be useful when receiving tax breaks for long-term ownership of securities (LDV). Recall that the investor is exempt from tax on income tax from the sale of shares and bonds, which were in his portfolio for more than three years. You may find it difficult to remember which securities and in what quantity they hit three years ago, and which later. And the brokerage report for the desired period will help you see it. Therefore, before selling securities, it is worth studying a broker report to calculate its tax deduction.

Broker pays income tax for clients. And the brokerage report is an official document that fixes it. If the broker suddenly loses the license and the investor will have to translate assets to another broker, the report will help to report to the new broker about paid taxes and avoid re-accrual.

Sometimes look at the history of its account operations is just useful. For example, an investor can get carried away by a type of securities, to move away from its strategy and to allow overcast in the portfolio. The need for rebalances will be visible without a brokerage report, but it will help restore the sequence of actions that led to an error.

The report is the most accurate sums of broker and stock exchange commissions. The fact is that it is not always possible to calculate the commission at the time of the transaction. Therefore, first the application shows theoretically maximum digit, and after, in the report, is real. This is due to the minimum commission for the operation. Suppose an investor wants to buy 100 shares. The broker does not know in advance how many transactions he will have to do for this — after all, it is not necessary for someone now someone sells 100 shares. Often you have to buy several packages from different sellers. Therefore, during the primary calculation, the broker will proceed from the most pessimistic scenario: 100 transactions in 1 shares. And since there is a minimum commission, the application will show 100 minimum commissions — the amount will be strongly overestimated. After making a deal, it is recalculated. And it is in the brokerage report that can be seen a reliable figure.

Finally, the broker report is an official document confirming income. It can be submitted, for example, when submitting documents for a visa.