InvestPilot - BRVM Trading Fees: Understanding Market Commissions, Brokerage Fees and TAF

1. Why is a share's market price different from its actual acquisition cost?

When you buy a share on the BRVM, the amount obtained by multiplying the execution price by the number of shares represents the gross amount of the transaction. However, this is generally not the amount that will actually be debited from your cash account. Several fees related to execution and financial intermediation are added to the gross amount. A purchase transaction can therefore be summarized as follows: Gross amount = Quantity × Execution price Then: Actual acquisition cost = Gross amount + Market commission + SGI commission + Applicable taxes This actual acquisition cost should be used when an investor wants to accurately measure the profitability of an investment.

Purchase price ≠ actual cost per share

If you buy a share at 10,000 FCFA, your actual cost per share will generally be higher than 10,000 FCFA because of commissions and taxes associated with the transaction.

2. Market commission: the cost associated with executing the transaction

The market commission corresponds to fees associated with the execution and processing of a transaction within the financial market infrastructure. On an execution notice, it may appear under an abbreviated heading such as "Com". It is separate from the fee charged directly by your SGI. It contributes to the costs associated with the infrastructure and institutional participants involved in organizing, executing and settling transactions on the market. The amount is generally calculated as a percentage of the gross transaction amount. In the execution notice used in our example, the purchase of 8 SONATEL shares at 31,500 FCFA represents a gross amount of 252,000 FCFA. The "Com" column shows 756 FCFA. The calculation is: 252,000 × 0.30% = 756 FCFA On this particular execution notice, the "Com" fee therefore represents 0.30% of the gross amount.

Example: Buying SONATEL shares

8 shares × 31,500 FCFA = 252,000 FCFA gross transaction amount. Market commission shown on the execution notice: 756 FCFA. 756 ÷ 252,000 = 0.30%. Important: this example describes the fees observed on this specific execution notice. Applicable rates should always be checked with your SGI and against its current fee schedule.

3. SGI commission: how your broker is compensated

An individual investor does not normally submit orders directly to the BRVM. Orders are placed through an authorized Management and Intermediation Company (Société de Gestion et d'Intermédiation — SGI). The SGI acts as an intermediary between the investor and the market. Among other services, it receives investors' orders, transmits them for execution and provides services related to securities accounts and transaction processing. In return, the SGI charges a brokerage or intermediation commission. In the execution notice used in our example, the investor uses CGF Bourse. The intermediary's own commission appears in the "Com CGF" column. For the SONATEL transaction with a gross amount of 252,000 FCFA, this commission amounts to 2,772 FCFA. The corresponding calculation is: 252,000 × 1.10% = 2,772 FCFA For this transaction, the CGF commission therefore represents 1.10% of the gross amount.

Not all SGIs necessarily charge the same fees

Your broker's commission may depend on its fee schedule, the type of transaction, the services provided or the commercial terms applicable to the client. When choosing an SGI, do not compare only market access: also compare brokerage commissions, account maintenance fees, custody fees and any other applicable charges.

4. Market commission vs. SGI commission: what is the difference?

These two commissions are easy to confuse because they appear on the same transaction, but they do not correspond to the same service. * Market commission: associated with the execution and processing of the transaction within the financial market infrastructure. * SGI commission: compensates the financial intermediary that manages and transmits your order. In our SONATEL example: Market commission: 756 FCFA CGF Bourse commission: 2,772 FCFA Together, the two commissions amount to: 756 + 2,772 = 3,528 FCFA When evaluating investment costs, it is therefore important not to treat every commission as if it were the same type of expense.

Who receives the money?

In simplified terms, the SGI commission compensates your financial intermediary, while market fees relate to the costs associated with the market infrastructure and participants. The exact institutional allocation of market fees depends on the rules and fee schedules applicable to the transaction.

5. TAF: a tax applied to financial activities

The TAF, or Tax on Financial Activities (Taxe sur les Activités Financières), differs from the previous commissions because it is a tax, rather than a brokerage fee or direct remuneration for the SGI. It is collected under the tax rules applicable to the relevant financial transactions and services and is remitted to the tax authorities in accordance with the regulations in force. For the SONATEL transaction in our example, the execution notice shows: * Market commission: 756 FCFA * CGF commission: 2,772 FCFA * TAF: 471 FCFA Total fees are therefore: 756 + 2,772 + 471 = 3,999 FCFA The TAF should therefore not be confused with an additional brokerage commission retained entirely by the SGI.

Be careful with tax rates

Tax rates and calculation methods may change. The examples presented here are intended to explain how to read an actual execution notice. To determine the tax rate currently applicable to your situation, consult the tax regulations in force or contact your SGI.

6. Complete example: purchasing 8 SONATEL shares

Let's now look at the entire transaction. The investor purchases 8 SONATEL shares at 31,500 FCFA each. Step 1 — Gross amount 8 × 31,500 = 252,000 FCFA Step 2 — Market commission 756 FCFA Step 3 — CGF Bourse commission 2,772 FCFA Step 4 — TAF 471 FCFA Step 5 — Total fees 756 + 2,772 + 471 = 3,999 FCFA Step 6 — Amount actually debited 252,000 + 3,999 = 255,999 FCFA The investor therefore did not actually spend only 252,000 FCFA on this position: 255,999 FCFA was debited from the account.

SONATEL transaction summary

Purchase price: 31,500 FCFA Quantity: 8 shares Gross amount: 252,000 FCFA Market commission: 756 FCFA SGI commission: 2,772 FCFA TAF: 471 FCFA Total fees: 3,999 FCFA Amount actually debited: 255,999 FCFA.

7. Why do fees affect your average cost per share?

The average cost per share, or cost basis, determines what each share has actually cost the investor. To accurately measure portfolio performance, it is useful to distinguish between the execution price and the actual cost including fees. In our SONATEL example, the execution price is 31,500 FCFA. Without including fees: Average cost excluding fees = 252,000 ÷ 8 = 31,500 FCFA Including fees: Actual average cost = 255,999 ÷ 8 = 31,999.88 FCFA The average acquisition cost including fees can therefore be rounded to approximately 32,000 FCFA per share. This means that the SONATEL share price must rise above approximately this level — ignoring potential selling fees and other factors — before the position begins to generate a positive net return.

A common mistake: calculating performance using only the purchase price

Comparing the current share price only with the execution price overstates your actual investment performance. Fees paid when acquiring the shares are part of the cost of your investment and should therefore be included in the calculation.

8. Full portfolio example: 1,506,010 FCFA invested

The execution notice used for this example contains several purchases of BRVM-listed shares. The combined gross amount of these purchases is 1,506,010 FCFA. The various fees shown on the document are: * Market commissions: 4,518 FCFA * CGF Bourse commissions: 16,566 FCFA * TAF: 2,811 FCFA Therefore: 4,518 + 16,566 + 2,811 = 23,895 FCFA in total fees The total amount debited is consequently: 1,506,010 + 23,895 = 1,529,905 FCFA The fees as a percentage of the gross transaction amount are: 23,895 ÷ 1,506,010 × 100 ≈ 1.587% In other words, for approximately 1.506 million FCFA worth of shares purchased, nearly 23,900 FCFA in additional charges were required to cover the fees shown on this execution notice.

Don't forget the 23,895 FCFA in fees

If the market value of the shares immediately increased from 1,506,010 FCFA to 1,520,000 FCFA, the investor might think that a 13,990 FCFA profit had been made. However, the actual acquisition cost is 1,529,905 FCFA. After accounting for the purchase fees, the overall position would still be below the amount actually invested.

9. Gross performance vs. net performance

Transaction costs explain why it is useful to distinguish between gross performance and net performance. Gross performance primarily measures the change in the market value of the securities relative to their purchase amount before fees. Net performance takes into account the costs actually incurred by the investor. For example, for a portfolio purchased for 1,506,010 FCFA but with an actual acquisition cost of 1,529,905 FCFA, a market value of 1,600,000 FCFA would produce: Gross capital gain = 1,600,000 - 1,506,010 = 93,990 FCFA However: Capital gain after purchase fees = 1,600,000 - 1,529,905 = 70,095 FCFA The difference is significant: 23,895 FCFA, exactly equal to the acquisition fees. To calculate the final realized return after selling the shares, any fees and taxes associated with the sale would also need to be included.

Net performance: remember selling costs too

An average acquisition cost including fees provides a more accurate view of your position. However, the return actually realized after selling must also take into account commissions, taxes and other charges that may apply to the sale.

10. How Bourse Tracker can calculate your actual portfolio performance

To accurately track a BRVM portfolio, Bourse Tracker can use all the information available on SGI execution notices instead of relying solely on the execution price and quantity. For each purchase: Gross amount = Quantity × Execution price Then: Acquisition cost = Gross amount + Market commission + SGI commission + TAF Finally: Average cost including fees = Total acquisition cost ÷ Total quantity held This approach makes it possible to provide investors with several complementary indicators: * Average cost excluding fees: average purchase price of the securities without commissions. * Average cost including fees: actual average acquisition cost per share. * Cumulative fees: total commissions and taxes incurred. * Gross performance: portfolio performance before transaction costs. * Net performance: performance after taking transaction costs into account. The objective is to answer a much more useful question than simply "Has my share price increased?": How much has my investment actually earned after fees?

The right benchmark: how much money did you actually invest?

In our example, 1,506,010 FCFA represents the gross value of the shares purchased, but 1,529,905 FCFA was actually debited from the investor's account. To accurately measure investment profitability, this actual economic cost should be used.

11. What should you check before placing an order?

Before choosing an SGI or making frequent transactions, take the time to review its fee schedule. Fees can significantly reduce investment performance, particularly for smaller transactions or investors who trade frequently. In particular, check: * the SGI's brokerage commission; * applicable market fees; * applicable taxes; * any minimum fee charged per order; * custody or account maintenance fees; * securities transfer fees; * fees related to dividend payments, where applicable; * the conditions and fees applicable to both purchases and sales. Two investors achieving exactly the same gross market performance may therefore end up with different net returns depending on the fees they incur.

These examples are not a universal fee schedule

The amounts and percentages presented in this article are illustrated using, among other things, a CGF Bourse execution notice. They should not be interpreted as universal rates applicable to every SGI operating on the BRVM. Fee schedules and tax rules may change, so always check the current conditions with your financial intermediary.

12. Key takeaways

When investing on the BRVM, remember four key amounts: 1. Gross amount: the value of the securities purchased before fees. 2. Market commission: fees associated with the execution and infrastructure of the market transaction. 3. SGI commission: compensation paid to your financial intermediary for brokerage and intermediation services. 4. TAF: a tax applicable to the relevant financial activities. These charges increase the actual cost of a purchase and should therefore be included when calculating your cost basis. The essential formula is: Actual acquisition cost = Gross amount + Commissions + Taxes Then: Average cost including fees = Actual acquisition cost ÷ Number of shares Ignoring these fees means overstating the actual profitability of your portfolio.

The Bourse Tracker rule

Don't just measure what your shares are worth today. Compare their current value with what they actually cost you. This difference provides a much more accurate picture of your portfolio's true performance.