How do HFT get around the SEC fee?

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VennData
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How do HFT get around the SEC fee?

Post by VennData »

When I sell an ETF I get charged a few pennies, Vanguard calls it the SEC fee. How do HFT eschew this?
IlliniSigEp
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Re: How do HFT get around the SEC fee?

Post by IlliniSigEp »

Easy answer, they don't. An HFT firm trading for its prop account pays SEC on every sale. Known as FINRA fee as well.
xerty24
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Re: How do HFT get around the SEC fee?

Post by xerty24 »

The people who trade the most pay the SEC's bills. Conflict of interest? You be the judge.
No excuses, no regrets.
ftobin
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Re: How do HFT get around the SEC fee?

Post by ftobin »

IlliniSigEp wrote:Easy answer, they don't. An HFT firm trading for its prop account pays SEC on every sale. Known as FINRA fee as well.
I'm pretty sure FINRA collects TAF, and the SEC has its own fees.
IlliniSigEp
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Re: How do HFT get around the SEC fee?

Post by IlliniSigEp »

ftobin wrote:
IlliniSigEp wrote:Easy answer, they don't. An HFT firm trading for its prop account pays SEC on every sale. Known as FINRA fee as well.
I'm pretty sure FINRA collects TAF, and the SEC has its own fees.
Ah! You are correct, mistake on my part, I had both the regulatory fees lumped together in my brain.
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Phineas J. Whoopee
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Re: How do HFT get around the SEC fee?

Post by Phineas J. Whoopee »

VennData wrote:When I sell an ETF I get charged a few pennies, Vanguard calls it the SEC fee. How do HFT eschew this?
Hi VennData,

If I understand correctly, a good part of the controversy surrounding high frequency traders is all the orders they enter and then swiftly cancel. There is no commission or fee (that I know of) for placing an order. Large brokerage firms actively seek out the business, which must mean all the order placing and cancellation does not cause a profitability problem.

Just to be sure I'm writing clearly, I do not mean in this post to take a position one way or another on high frequency trading.

PJW
xerty24
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Re: How do HFT get around the SEC fee?

Post by xerty24 »

Phineas J. Whoopee wrote:If I understand correctly, a good part of the controversy surrounding high frequency traders is all the orders they enter and then swiftly cancel.

A good part of the controversy surrounding high frequency trading is that someone else is getting rich while you aren't and in a way you dont really understand. Envy is a natural response that the media plays well too, and their reporting on HFT has been uniformly terrible and riddled with inaccuracies.
There is no commission or fee (that I know of) for placing an order
depends on the markets, some options and futures markets have cancel fees; stocks typically not. But exchanges can get annoyed if you send too many orders with too few actual trades and fine you or charge you other high fees for insufficient fill rates. This isn't really part of the problem, to the extent you think there is one.
No excuses, no regrets.
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Phineas J. Whoopee
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Re: How do HFT get around the SEC fee?

Post by Phineas J. Whoopee »

xerty24 wrote:
Phineas J. Whoopee wrote:If I understand correctly, a good part of the controversy surrounding high frequency traders is all the orders they enter and then swiftly cancel.

A good part of the controversy surrounding high frequency trading is that someone else is getting rich while you aren't and in a way you dont really understand. Envy is a natural response that the media plays well too, and their reporting on HFT has been uniformly terrible and riddled with inaccuracies.
There is no commission or fee (that I know of) for placing an order
depends on the markets, some options and futures markets have cancel fees; stocks typically not. But exchanges can get annoyed if you send too many orders with too few actual trades and fine you or charge you other high fees for insufficient fill rates. This isn't really part of the problem, to the extent you think there is one.
Your knowledge of the subject is clearly superior to mine, so I yield.

I would only like to ask that I may be permitted to quote myself, little as so doing may comport with decorum:
Phineas J. Whoopee wrote:Just to be sure I'm writing clearly, I do not mean in this post to take a position one way or another on high frequency trading.
PJW
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VennData
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Re: How do HFT get around the SEC fee?

Post by VennData »

I'm not anti-HFT, quite the contrary, I think computers would do a much better job. However,How can they be making these small increments if they have to pay that fee? They can't. So the anti-HFT people who talk about scalping pennies are not be factual.
ftobin
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Re: How do HFT get around the SEC fee?

Post by ftobin »

VennData wrote:I'm not anti-HFT, quite the contrary, I think computers would do a much better job. However,How can they be making these small increments if they have to pay that fee? They can't. So the anti-HFT people who talk about scalping pennies are not be factual.
HFT can be making "small increments", still pay the fee, and still be profitable. The SEC and TAF fees are significant, but we're talking amounts generally less than $0.0001/share.
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