What is a SEC Fee (Section 31 Fee) on TD Ameritrade, Fidelity, and Ally Invest 2021

What is broker SEC Fee (Section 31 Fee)? SEC transaction fee on TD Ameritrade, Fidelity, and Ally Invest. $0.0000051/$5.10 per million dollars in transactions.

The U.S. Securities and Exchange Commission (SEC) Transaction Fee

Traders will notice a small fee attached to each trade that they make, no matter what type of security or contract is being traded. While the fee is quite small, savvy investors like to keep track of any fees that are charged to their accounts. Whether you are curious about what the SEC fee is, where it came from, or why you must pay it, we have the answers for you here. Read on to learn more.

Section 31 Fee Background

The fee is known as a “SEC fee,” or a “Section 31 fee,” and it is often not more than a few cents. The SEC fee is designed to reimburse the government agencies in charge of regulating the financial markets for their efforts. In 1934, when the law was passed, the fee was set to 1% of one three hundredth of the total dollar amount resulting from the purchase or sale of a security. Since then, the amount has steadily increased.

Interestingly, the SEC fee is not actually charged to individual traders by the U.S. Securities and Exchange Commission. Instead, the SEC charges SROs (self-regulatory organizations) like FINRA. SROs then charge brokers, and the brokers charge their traders.

Another interesting fact about the Section 31 fee is that it changes each year. The amount-per-million that SEC asks of its SROs is adjusted based on overall trading volume. More volume leads to lower fee requirements, and lower trading volume has an opposite effect.

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Current Fee Structure (2021)

The rate for 2021 is set at $5.10 per million. For individual traders, that means a fee of approximately $0.0000051 multiplied by the total dollar amount of a trade should be expected. For smaller trades, many brokers also set a minimum amount to be paid per trade. The minimum SEC fee is often set at $0.01.

In addition to the fees placed on equities, SEC also applies a flat rate fee to futures contract transactions. For each round trip of a futures trade, expect to pay $0.0042.

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