The Structure of Brokerage Commissions — How Different Are Domestic and Overseas Stocks?
Have you ever opened an account after seeing an ad for "lifetime free commissions"? But is it really free? Once you know the structure of brokerage commissions, the answer becomes clear.
What Is a Brokerage Commission
A brokerage commission is the fee you pay to a brokerage when you buy and sell stocks through it. You can think of it as the price of the service by which the brokerage delivers your order to the exchange and executes it.
It is usually calculated by multiplying the trade amount by a certain rate (%). For example, if the rate is 0.1%, buying about $740 worth incurs about $0.74. Since it is charged on both buying and selling, you should think in terms of a round trip.
Domestic Stocks vs. Overseas Stocks
Domestic-stock online brokerage commissions are fiercely competitive, and in many cases they have dropped to the 0.01% range (or below, through promotions) on a non-face-to-face basis.
By contrast, overseas stocks such as U.S. ones tend to have higher rates. Roughly from the 0.07% range up to 0.25%, with a wide spread depending on the brokerage and promotion. It is common for them to be several times higher than domestic stocks.
Commission rates differ by brokerage, promotion, and trading channel (mobile, PC, phone) and change frequently. The numbers here are just examples for a given period; you must always check the actual rate in your own account's fee schedule.
The Trap of "Free" Commissions
Even if the brokerage commission is zero, other costs of trading remain.
For domestic stocks, a securities transaction tax (0.15% as of 2025) is charged when selling; this is a tax, not a brokerage fee, so it is charged regardless of "free commissions."
For overseas stocks, the FX conversion spread and, in the case of the U.S., regulatory costs such as the SEC fee on selling are charged separately. In other words, "free commissions" only removes the brokerage commission; it does not mean the total transaction cost is zero.
Frequently Asked Questions
Q. Is it enough to just pick the brokerage with the lowest commission?
Low commissions are an advantage but not everything. For overseas stocks, you should also look at the FX preferential rate, the stability of the trading system, and support for tax filing. For long-term investors who do not trade often, the commission difference itself may be a small share of total costs.
Q. Are the brokerage commission and the securities transaction tax different things?
Yes. The brokerage commission is the fee paid to the brokerage, while the securities transaction tax is a tax paid to the state. They are charged separately, and for domestic stocks in particular, the transaction tax on selling often takes up a larger share than the commission.
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