Spread markup
Family IV · Costs
Not to be confused with spread, forex spread, good spread.
Spread markup is the difference between the spread available in the underlying market and the spread a broker quotes to a client. It is a pricing method, not a separate fee: the broker widens the bid-ask range and keeps the difference. Markup is common on raw-spread or commission-based accounts, where the commission covers part of the cost and the markup covers the rest.
How markup is applied
On a raw-spread account, the broker passes through the spread it obtains from liquidity providers and adds a fixed or variable markup. The client sees only the final quoted spread. On a standard account, the markup is usually embedded in a wider all-in spread and no separate commission is charged.
Markup can be expressed in pips, in points, or as a percentage of the raw spread. It may be constant across sessions or vary by instrument, account type, and market conditions. The amount is set by the broker and disclosed in the trading terms.
Worked example
The client trades at a 0.5-pip spread. The 0.3-pip difference is the markup retained by the broker, separate from any commission.
Where it appears
Markup is most visible on accounts advertised as raw spread, ECN, or STP, where the broker separates its compensation into commission and markup. It also exists implicitly on standard accounts, where the quoted spread already includes the broker's margin. Because markup varies by broker and account type, the quoted spread alone does not show the total cost; commission and financing charges must be added.
Often confused with
- spread
- A spread is the raw difference between bid and ask, while spread markup is the amount added to that difference by a broker; the visible sign is that the quoted spread is wider than the underlying market spread.
- forex spread
- A forex spread is the bid-ask difference in a currency pair, while spread markup is a broker-specific addition to it; the visible sign is that the markup appears as a separate line or is disclosed in the account terms.
- good spread
- A good spread is a narrow quoted spread, while spread markup is a cost component that widens it; the visible sign is that a good spread can still carry a markup, so the quoted figure alone does not show the broker's margin.