March 16, 2009 at 6:45 am | | Comments 4

SEC Fees Set to Quadruple on April 1

This is no April Fool’s joke.  I wish it were – it’d save me a lot of money!  But the SEC is making a mid-year adjustment to transaction fees, effective April 1, and it’s a significant one.

Right now, traders pay $5.60 per million dollars in sales, which granted, doesn’t sound like much.  It’s a cost of doing business for traders, and not a very steep one at that when added to commissions.

However, in 2 weeks when the SEC fees change, it will go to $25.70 per million – more than 4 1/2 times higher.  That’s not quite as bad as the proposed Trader Tax which was recently making so many headlines, but it’s more real and it’s going to happen.

Putting the Pen to Paper

If you’re actively day trading, here’s what this translates into.  Depending upon your level of activity and the size you tend to trade, this could translate into several thousand dollars more per year in fees for you.

For example, let’s say you sell an average of $1M in stock each day.  That’s a very feasible number considering you could sell 20,000 shares (buy + sell = 40,000 total) over the course of the day at an average price of $50 (20,000 X $50 = $1M).  For that activity level right now, that would basically cost you $5.60 in SEC fees on top of whatever your commission is.  With the new structure, you’d pay $25.70.

Do that 5 days a week, and it’s $100 more per week.  Trade every week at that level, and you’re looking at a hike of $5,200 over the course of the year.

Here’s a link to the SEC Mid-Year Adjustment to Fee Rates document itself for more intricate details if you want to check it out.

Bottom line:  keep improving as a trader and it’ll be fine!

Jeff White
President, The Stock Bandit, Inc.
Swing Trading & Day Trading Service

[tags]Stock Market, Day Trading, Stock Trading, Investing, Swing Trading[/tags]

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  1. A hike in the SEC fee at a time when they have failed the US markets so horribly is ridiculous. They have not enforced the rules on the books for years (ie. the naked short rule). They missed Madoff, even when the whistle had been blown years ago.

    On a more positive note, the fee won’t be felt as much this year because if you trade 20,000 shares/day at $40 vs 20,000 shares/day of the same stock last year at $100 it will take you longer to reach one million dollars in volume. As the market recovers this fee will be felt by active traders even more.

  2. Hey Brian,

    Thanks for your comments! You’ve raised some excellent points – ones which I hadn’t even considered. I’m glad you posted them here, thanks again!


  3. This is not a good thing for traders at all! Does this have anything to do with Barack Obama?

  4. Hey Ray,

    Couldn’t tell ya but you’re right, this is a real expense that’s right around the corner.
    Thanks for reading & your comment!


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