What is 'Each Way'

Each way describes a situation in which a broker earns a fee from both the buyer and the seller in a transaction.

Breaking Down 'Each Way'

Each way represents an opportunity for a broker to double dip, effectively getting paid twice for a single transaction. The mechanics of going each way on a deal are straightforward: A given broker may represent both buyers and sellers. If one client wants to sell a security that another client would like to buy, the broker may facilitate a transaction between the two clients and charge fees to both of them.

The allure of getting paid each way, sets up a potential conflict of interests for brokers. The broker, who should be acting in the best interests of the client, has a financial incentive to match up one client with another, and collect two commissions from a single transaction, rather than help the client find a seller or buyer who may be a better match but generate less in fees for the broker.

For that reason, some brokerages place limits on their brokers’ ability to go each way.

Double Dipping Beyond Going Each Way

Brokers have opportunities to double dip besides going each way on a trade between two retail investors. For example, managers of fee-based accounts can buy shares of mutual funds from their own firm, earning an internal commission in addition to the management and transaction fees the investor pays. The broker could facilitate this transaction ethically by depositing the internal commission into the client’s account, but it would be easy not to and hope no one notices.

Investors should read all documents coming from their brokers because they will include any mandatory disclosures regarding fees. If those documents are rife with legalese, investors should enlist the aid of a lawyer.

Each Way and Real Estate

Real estate transactions are an opportunity, outside of financial markets, for brokers to go each way. It’s generally legal if both parties are aware that the agent represents both of them and makes two fees, but the broker can’t pass confidential information from one party to the other, such as the seller’s real bottom line.

In 2016, the CBC reported on real estate agents in Toronto who unethically and unlawfully used their status as the seller’s agent to privilege offers from prospective buyers they also represented. In doing so, the agents violated their fiduciary responsibilities to the sellers. The media treated this partly as a Canadian phenomenon, pointing to the country's recent real estate boom and influx of realtors to paint the situation largely as the product of desperate brokers taking advantage of slow-to-react regulatory agencies. But dual agency is legal in other countries, such as the United States. As such, sellers should be cautious when choosing realtors to ensure that their representatives will work for their best interests.

RELATED TERMS
  1. Broker

    1. An individual or firm that charges a fee or commission for ...
  2. Agency Broker

    An agency broker is a broker that acts as an agent to its clients. ...
  3. Outside Broker

    The term outside broker has several applications in finance. ...
  4. Give Up

    Give up is a procedure in securities or commodities trading where ...
  5. Brokered Market

    A brokered market involves agents or intermediaries in purchase ...
  6. Listing Agreement

    A listing agreement is a document in which a property owner contracts ...
Related Articles
  1. Investing

    How Do Real Estate Agents Get Paid?

    Most real estate agents are paid a commission based on the sale price of a property and split between the agents and brokers involved.
  2. Investing

    Picking your first broker

    If you're a rookie investor, choosing a broker may be your first big investment decision. Learn more on whether you should you go with a full-service broker or a discount broker.
  3. Investing

    How to Choose the Right Real Estate Broker

    Buying or selling a home can be the major financial transaction of your life. Here's how to choose the right real estate broker or agent.
  4. Investing

    Brokerage Accounts, Explained

    Brokerages bring together customers or institutions and world financial markets. Here's everything to know about how they operate and what they do.
  5. Financial Advisor

    Deal Effectively With Difficult Clients

    Learn how to tame the most shrewish clients with these simple methods.
  6. Investing

    Career Comparison: Real Estate Agent or Mortgage Broker

    Considering a career as a Real Estate Agent or Mortgage Broker? This article can help you understand important differences between these careers.
  7. Financial Advisor

    Investment Advisor Versus Broker: How They Compare

    What is the difference between an investment advisor and a broker?
  8. Personal Finance

    Advantages And Disadvantages of Using a Mortgage Broker

    Mortgage brokers may be able to find you the loan of your dreams, but you should consider the potential downsides before hiring one.
  9. Small Business

    8 Ethical Guidelines for Brokers

    Examine the less obvious ethical dangers faced by a broker or financial advisor to help avoid trouble in ethical gray zones while managing client's money.
RELATED FAQS
  1. If everyone is selling in a bear market, does your broker have to buy your shares ...

    Learn about who the counterparty to your trades is, and how your broker functions during a market sell off. Read Answer >>
  2. How are real estate agents, brokers, and realtors different?

    Agents, brokers and realtors are often considered the same. In reality, these real estate positions have different responsibilities ... Read Answer >>
  3. What Is Financial Double Dipping?

    Double-dipping occurs when a broker gets paid twice for the same transaction. Read Answer >>
  4. What is the difference between a broker and a market maker?

    A broker is an intermediary who has a license to buy and sell securities on a client's behalf. Stockbrokers coordinate contracts ... Read Answer >>
  5. Why Do Brokers Ask for Personal Information?

    There are 3 reasons a broker needs personal information: suitability, record-keeping and the law. Read Answer >>
Trading Center