Markups & Markdowns
The dealer's profit on a principal trade.
What is Markups & Markdowns?
A markup is added to the price when a dealer sells to a customer; a markdown is subtracted when buying from one. FINRA's 5% policy is a guideline, not a hard limit: fairness depends on the security, market conditions, price, and the services provided. Markups must be computed from the prevailing market price.
Markups & Markdowns: a worked example
A 7% markup on a liquid Treasury note is almost certainly unfair even though the 5% figure is only a guide.
More terms in Retirement Plans, Accounts & Trading
IRA Rollovers vs. Transfers
60-day rollovers are limited to one a year; direct transfers are unlimited.
10% Early Withdrawal Penalty & Exceptions
Distributions before 59 1/2 cost 10% extra, unless an exception applies.
Solo 401(k)
A 401(k) for a self-employed owner with no employees other than a spouse.
Defined Benefit Plan
A pension promising a specific benefit; the employer bears the investment risk.
Defined Contribution Plan
An individual account plan whose payout depends on contributions and returns.
403(b) Plan
A salary-deferral plan for public schools and 501(c)(3) nonprofits.
457 Plan
Deferred compensation for state and local government employees.
SIMPLE IRA
A low-cost plan for employers with 100 or fewer employees.
All Retirement Plans, Accounts & Trading terms · Full glossary