FINRA Trading Activity Fee (TAF)

What is FINRA trading activity fee on Tradestation and JP Morgan Chase. FINRA TAF fee of $0.000145 per share for each sale of a stock and $0.00244 per options contract.

FINRA TAF Trading Activity Fee Explained

If you’ve read through any of our articles on the hidden fees charged by different brokers, the one fee you’ve probably seen mentioned in all of them are regulatory fees. This is because all brokers - full-service and discount brokers - pass on regulatory fees to their clients – even the “commission-free” brokers pass these fees on. Although these fees are pretty small, given that they are unavoidable, you may be curious to know what they are exactly.

Types of Regulatory Fees

There are three regulatory fees that you are most likely to see on your brokerage trade confirmations, each one applied only to the sale of a security and levied by a different agency. The Trading Activity Fee (TAF) is charged by the Financial Industry Regulatory Authority (FINRA), the SEC or “Section 31” Fee is charged by the Securities and Exchange Commission (SEC), and lastly, an options fee is collected by the Options Clearing House (OCC). Next, we’ll provide a bit more detail on what these agencies are and why they levy these fees.

FINRA’s Trading Activity (TAF) Fee

FINRA is a private, self-regulatory organization that drafts up many of the regulations that govern the securities markets and the various firms that are a part of the industry. Almost all brokers are members of FINRA as it is in their best interest to make sure their voice is heard when new guidelines and best practices for the industry are being decided on. FINRA also conducts regulatory exams of its member institutions and licenses individuals that work in the securities markets.

FINRA funds most of its activities by levying the Trading Activity Fee, which is applied on sales of most securities. The current rate is about $0.000145 per share for stocks with a maximum per sale charge $6.49. This means you would be charged $0.12 on a sale of 1,000 shares. This fee is $0.00244 per contract for options sales and $0.00075 per bond for fixed income sales. Your broker will collect this fee on your behalf (you should see this listed on your brokerage trade confirmation) and deliver it to FINRA.

trading activity fee

The SEC Fee or “Section 31 Fee”

The SEC is similar to FINRA in that it also regulates the securities markets, but it’s different in that it is an official government agency with all the legislative authority that comes with that role. While the broker members of FINRA can come up with best practices to govern themselves, they ultimately must answer to the SEC, which drafts, approves, and enforces securities laws in the U.S. To help fund their efforts, they charge an “SEC Fee” on sales of all listed equities equal to roughly $20.70 for every $1,000,000 in sales, which would amount to $0.21 for a $10,000 sale.

Options Regulatory Fee

Lastly, the Options Clearing Corporation (OCC), which issues and guarantees options contracts under the supervision of the SEC, also levies a small fee on sales of options in order to support their supervision and regulation of the options markets. This fee varies a little depending on the specific options exchange but is on average $0.0169 per contract.

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Updated on 10/7/2024.

About the Author

Chad Morris is a financial writer with more than 20 years experience as both an English teacher and an avid trader. When he isn’t writing expert content for Brokerage-Review.com, Chad can usually be found managing his portfolio or building a new home computer.