Posted in Finance, Accounting and Economics Terms, Total Reads: 155
Definition: Flat Dollar
Flat Dollar is the fee which is charged as an absolute amount instead of a percentage of a forex transaction. The fee is charged as a rate at the time of a foreign exchange transaction and is generally preferred in large contracts. A flat dollar amount is considered as fixed no what matter whatever changes. It is considered as more economical by the investors as it doesn’t depend upon the transaction size.
The brokers are generally commissioned brokers and flat-fee brokers. Commissioned brokers are those that are paid according to each order of securities they execute on behalf of the customers. Flat-fee brokers are those which are paid a fixed amount and are not dependent on the number of order of securities executed by them. Investors prefer flat-fee brokers more as they try to get the best deal for their customers and not push them in securities that aren’t of any use to them just because of high commissions. Commissioned brokers may indulge in unethical behavior just to get high commissions. Flat Dollar helps in getting loyal customers and a steady business.
In today’s world, investors as well as the businesses prefer flat dollar method. It is more economical and also motivates the broker to work according to the customer’s best interest. There are many benefits of going for a flat dollar method of payment:
It allows to develop loyalty among customers by proving a more ethical service to them.
It motivates the businesses or brokers to work more for the betterment of the customers and according to their interests.
Flat Dollar can take into account all the expenses associated with it and need not change from time to time.
A flat dollar fee is increasingly replacing the percentage based fees in various domains in the best interests of the customers as well as the business who are trying to prosper.