Friday, April 3, 2009

And So it Goes...

From Think or Swim:

"NOTE: Pursuant to SEC Release 2009-56 there is an impending increase to the Section 31 fee rate that all clearing firms are required to charge to securities transactions on the exchanges and over-the-counter markets. As of April 10, 2009, the fee (commonly referred to as the "SEC Fee") will be raised to $25.70 per million dollars from the current $5.60 per million dollars."

"NOTE: Beginning March 1, 2009 the Chicago Board Options Exchange (CBOE) implemented a new transaction-based Options Regulatory Fee (ORF). This fee is $.006 per contract with a minimum of $.01 (one cent) per trade. For example, if you buy one option, the ORF is .01; if you buy 10 options, the ORF is $.06; if you sell 10 verticals, the ORF is $.12. The fee is being charged on any options trade that clears as a customer transaction at the OCC regardless of the marketplace of execution. In other words, it does not matter if the trade was executed on the ISE or some other exchange as long as the trade was executed by a firm that does business with the CBOE. The reasoning provided by the CBOE for assessing this fee is that it has regulatory obligations that reach across all exchanges, for example, many of the surveillance programs for customer trading activity require the CBOE to look at activity across all option markets, such as surveillances for position limit violations, manipulation and insider trading."

6 comments:

Damian said...

Looks like just a penny on all option trades? I don't see anything on stock trades....

Jeff Pietsch CFA Esq said...

See Note #1.

Jeff Pietsch CFA Esq said...

http://www.sec.gov/answers/sec31.htm

Damian said...

Ah yes....so:

$5.6 per million: 0.0000056
$25.7 per million: 0.0000257

So on a $10k transaction:

$0.056
$0.257

If we said that this was 200 shares, that would be:

0.001285 per share vs. the old rate of 0.00028 per share.

Am I calculating that correctly?

Jeff Pietsch CFA Esq said...

Too much math for a post-Friday close... but next thing you know that trader tax will be imposed!

"H.R. 1068 was introduced in the House of Representatives on February 13, 2009. This legislation would impose up to a 0.25 percent tax on financial transactions, including the sale and purchase of stocks, options and futures"

Damian said...

Could be that they just put through the tax without using Congress. Of course, it could also be to pay for the increased supervision that will be required from the SEC in the future.