What is an Options Regulatory Fee (ORF) in 2022


What is broker Options Regulatory Fee (ORF)? Options Clearing Corp (OCC) fee on ETRADE, Interactive Brokers, Tastyworks and Ally Invest.



Options Regulatory Fee (ORF)


For an options trader, keeping track of the fees associated with each trade is an important part of the process. There are a few different fees applied to the purchase and sale of options contracts and they can certainly add up when trading at high frequency. Other than the trade commissions charged by the broker, regulatory fees also apply. One example is the Options Regulatory Fee, also known as the ORF fee.

The Options Regulatory fee is one of two small fees that is added to the cost of each trade. Besides the regulatory fee, there is also the clearing fee.


What is the Options Regulatory Fee (ORF)


Initiated in 2009 by the Chicago Board Options Exchanges (Cboe), the Options Regulatory Fee originates with exchanges. The purpose of the fee is to recoup some of the costs of doing business for the Chicago Board Options Exchanges. The exchanges charge their customers (stockbrokers and clearing houses) and then the fee is passed along to the individual investors.


ORF Fee Breakdown


The Options Regulatory Fee is calculated using a large number of variables, but the most important are trading volume and exchange type. Essentially, in months with higher trading volume, the ORF for the following month(s) can be a bit higher. Likewise, when trading activity slows, the ORF costs come down.

Each option exchange also has its own fee schedule. For example:

Cboe Options = $0.0017 per contract, per side (buy and sell)
C2 Options = $0.0003 per contract, per side
BZX Options = $0.0001 per contract, per side
EDGX Options = $0.0001 per contract, per side

It is also important to note that different brokerages and clearing houses may be charged different rates depending on some of the aforementioned variables. For that reason, it should not come as a surprise to see the ORF fee range from $0.0001 to $0.004 per contract, per side.


ORF Fee


Options Clearing Corp (OCC): Clearing Fees


When trading options, it is wise to understand the fees that are associated with each trade. The most common (and costly) fees are the commissions that brokers charge, but there are also some small regulatory fees that are added to the overall cost of each purchase and sale of an options contract. While these added fees can seem insignificant to some types of traders, they can add up in some trading situations. Many of these ‘micro’ fees comes from the Options Clearing Corp (OCC). Read on to learn more.


Who or What is the Options Clearing Corp?


Options Clearing Corp (OCC) oversees most of the options activity in the US. They monitor every organization that is involved with the options markets. Stockbrokers, clearing firms, institutions, and individual investors.

To finance the organization’s efforts, the OCC charges certain fees for each purchase and sale that the Options Clearing Corp facilitates. One of those fees is the Clearing Fee. The clearing fee is calculated with many variables and the fee is usually different from broker to broker.


Clearing Fee Examples


Here are some examples of the clearing fee from popular brokers.

Tastyworks:

Purchasing stock and ETF option contract = $0.10
Selling stock and ETF option contracts = $0.10

E-Trade:

Blended clearing fee for purchasing and selling option contracts = $0.0122

Interactive Brokers:

Purchasing and selling fewer than 2,750 option contracts = $0.02 per contract
Purchasing and selling greater than 2,750 option contracts = $55 per trade.

Ally Invest:

Purchasing and selling stock and ETF options contract = $0.02


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