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Soft Dollar Commission Tiers

Advisors and hedge and mutual funds have the option to offset the costs of approved research products and services using soft dollars. Once you have requested soft dollars via Account Management and defined the commission tiers, you can select the commission tier on a per-trade basis from within TWS. Soft Dollars are available on stock and option orders only, and can be applied on all pricing structures.

For instructions on requesting soft dollars via Account Management, see the Soft Dollars topic.

Soft dollar commission tiers can be selected from the Misc tab of the order ticket, or from the Soft Dollars order field directly from an order row using the drop-down list.

To display the Soft Dollars field

1. Hold your mouse over an order row field for two seconds, or until the green "+" sign appears.
2. Click the "+" sign to invoke the Order Row field list.
3. Select Order Attributes, then select Soft Dollars.

The Soft Dollars field is displayed to the left of the field you originally selected.

When you create a client stock or option order, you can specify the commission tier for the order by clicking in the Soft Dollars field and selecting a tier. Tiers must be defined in Account Management. Soft dollar commissions must be between 0 and 0.05 dollars per share.

Note:   Please note that this tier selection is used to calculate the total gross commissions, and the soft dollar disbursement amount is the remainder once all IB commissions have been deducted.

Let's look at a simple example on a stock order using the Fixed Rate commission structure. On the above order for 1000 shares with Tier 5 selected, total client commissions would be 1000 (shares) x 0.05 (tier rate) = $50.00. The IB Fixed Rate commission on this order ($.005/share) is 1000 x .005 = $5.00. The soft dollar amount would be equal to $45.00 for this order.

To choose a commission tier for an order

1. Click the Bid or Ask price to create a Sell or Buy order.
2. In the Soft Dollars field, select a commission tier.

Note:  If you do not select a tier for an order, no soft dollar markup is applied. There is no default value.

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