Spread markup: where the biggest rebates come from

Spread markup is the amount a broker adds on top of its raw spread, and it is the reason one sign-up
route can pay three times the rebate of another. Looked at on its own, the marked-up route always wins
on the rebate number. But that addition is paid by you on every entry, so the right question is not
“which rebate is highest” but “after adding the markup and subtracting the rebate, which side leaves
less money with the broker”.

Where markup sits in the quote

The spread you see has two parts: the bid-ask difference the broker receives from its liquidity
provider, and the amount the broker adds before showing you a price. The second part is the markup. On
an ordinary account it is already inside the spread and you never see it as a separate line.

Markup matters because of the introducing-partner model. Some brokers let a partner choose the markup
applied to the accounts they refer, then pay the partner part of that addition. So the same broker and
the same account type can produce two different spreads — and two different rebates — depending on which
route you signed up through.

Markup is not commission. Commission is charged separately, appears as its own line in your trade
history and is calculated per lot. Markup never appears as a line: it is already inside the price, so all
you see is a wider spread. The contract
specification on your platform shows contract size, tick size and swap, but it does not tell you how much
markup the spread contains. That figure comes from the terms of the sign-up route.

Turning markup into money

Markup is usually published in pips or points, so the first step is converting it to money. On a pair
quoted to four decimals, one pip on a standard lot is worth roughly $10, so a 1-pip markup adds about $10
per lot and a 2-pip markup about $20. Pip value differs by instrument, so do not carry the EUR/USD figure
across to gold or to JPY pairs — see
lot, pip and pip value.

That per-lot number is what belongs next to the rebate. If a route adds 1 pip and pays $10 more per
lot, the two sides cancel and you have saved nothing — the money has simply taken a longer path. If the
addition is $10 and the rebate rises by $6, you are paying more than you receive.

There is a reason markup looks small but weighs heavily on majors. Raw spreads on the major pairs are
already very tight, because global turnover concentrates in a small group of them. When the base is 0.6
pip, adding 1 pip is not a small increase — it roughly triples the spread cost of the trade.

Why marked-up routes always show the higher rebate

On any rebate table the largest numbers nearly always belong to a marked-up route, for the reason
above: the bigger rebate is taken out of the addition, so it is bigger by roughly the amount you pay
extra. This is also why comparing two account types at the same broker can look counter-intuitive — a
Standard account often pays several times the rebate of a Raw/ECN account, simply because Standard carries
markup in the spread and Raw does not. A higher rebate here is not a better deal; it is a consequence of
the fee structure, which is why “who pays the highest rebate” is always half a question.

One detail worth checking per instrument: at brokers publishing several markup tiers, not every
instrument scales with the tier. Some keep the same rebate across all tiers while the spread is still
marked up — for those, choosing a high tier means paying more and receiving nothing more.

When a marked-up route is still worth taking

Three cases, all from the same fact: the rebate is cash in hand, while spread is a cost you only incur
when you enter. First, when the rebate rises by more than the markup on the instrument you actually trade.
Second, when you hold long and enter rarely, so the addition is paid few times. Third, when the cash flow
itself has value to you — that is a cash-flow decision, not a cost decision, and it should be called by
its right name.

The case that is almost always unfavourable is scalping
or a high-frequency EA on a marked-up route: the addition is paid hundreds of times a month while the
rebate scales with the same lots and rarely covers the difference at execution.

Check it before you open the account

Markup is set when you choose the sign-up route, and most brokers will not change it afterwards. Record
the markup of each route, convert it to money on your own instrument, take the matching rebate for that
same instrument, then subtract and multiply by your monthly volume. A $4 per-lot difference is $400 a month
at 100 lots and $20 at 5 lots.

After the account is open you can sanity-check it yourself: compare your actual spread with the published
spread for that account type in the same hours. A stable, repeating difference points to markup; a difference
that only appears around data releases is spread widening, which is a different thing.

This article is for information and cost analysis only and is not investment advice. Markup, spread, commission and rebate policies vary by broker, instrument, account type and date — check the current terms before opening an account. Leveraged forex and CFD trading carries a high level of risk and can cost you your entire deposit.