4 ms·

It costs me x dollars to place a trade, how are they getting around a trading fee? Or do not all people have to pay trading fees?

• dkhenry 13y ago
  As I understand it if you never have your trades "cleared" you never incur any cost. When you trade the price to have the trade cleared through a clearing house is built in. When big firms trade they only need to go to the clearing house to square up their books.
  • kolbe 13y ago
    Exchanges charge. HFT firms don't pay a broker, but thy still have to pay exchange fees. Most don't clear themselves, too, so they have a clearing fee. Also, some small FINRA fees. And this is not to mention that the right to be a market maker often costs a lot to begin with.
    • dkhenry 13y ago
      yes but do they have to clear all the trades or just at the end of a session ? I was under the impression that you could pool your holdings and clear them once instead of for each individual trade. Also I thought exchanges charge for access not for activity. So Its a fixed fee to be able to talk to the exchange,but I can send in as many orders as I want.
      • AndrewBissell 13y ago
        Most exchanges now charge on a "maker/taker" basis, where liquidity-taking trades (lifting an offer or hitting a bid) are assessed a fee, while liquidity-providing trades (working a bid or offer which is ultimately filled) are paid a small rebate.
        • dkhenry 13y ago
          So that's the exchange side, what about the clearing. As I understand it that's where the bulk of the cost comes from.
      • kolbe 13y ago
        You can't aggregate the clearing fee away. It's applied to every trade. And clearing fees are small compared to exchange fees anyway. There are some fixed fees to be designated as a market maker on some exchanges. Others just charge based on a free-for-all maker/taker model. Another "fee" that market makers incur that retail customer don't is direct market data, which is painfully expensive. But that's fixed, not a function of trades.