How to Calculate Rebate Based on Spread Percentage

Each broker can have a different system for calculating rebates or commissions given to IBs, including based on the spread percentage when opening or closing an order.

The following is an example of rebate calculation based on spread percentage:

For example, the spread when opening an order is 2 pips (20 points for a decimal price of 5) with a rebate offer of 20% of the spread, then the rebate amount in pips is 20% x 2 = 0.4 pips.

If the rebate is calculated in USD , the value is based on the contact size (lot size) as follows:

• Rebate for  contract size of 1,000 units which is usually called Micro lot (1 pips =  $0.1) :  $0.1 x 0.4 pips = $0.04 per lot.
• Rebate for  contract size of 10,000 units which is usually called Mini lot (1 pips =  $1) :  $1 x 0.4 pips = $0.4 per lot.
• Rebate for contract size of 100,000 units which is usually called  Standard lot (1 pips =  $10) :  $10 x 0.4 pips = $4 per lot.

Please note that for account types that use floating spreads, the amount of rebate you get for each order may be different even though the number of lots is the same because the spread can be different for each order.