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What is the Trading Activity Fee? The TAF is a transaction-based fee that is generally assessed on member firm transactions in covered securities, regardless of where the trade is executed. How often is the Trading Activity Fee assessed? The Trading Activity Fee is assessed on a monthly basis. Data should be submitted as monthly aggregates at the clearing firm level. Should the data be submitted on a trade by trade basis for the Trading Activity Fee?
Monthly aggregate data should be submitted to FINRA by the 10th business day following the end of the month. This should include aggregate number of shares for stocks, aggregate number of contracts for options and aggregate etrade options exercise fee of round turn transactions for security future products.
Should the data be calculated from the trade date or the settlement date? The etrade options exercise fee should be calculated from the trade date.
How do you calculate the rate for the Trading Activity Fee? Does the fee have minimum and maximum etrade options exercise fee The rate for the Trading Activity Fee is based on aggregate volumes. There is a separate rate for share volume for stocks, contract volume for options, round turn transaction volume for futures, and bond volume for debt. Do rounding rules apply for the Trading Activity Fee? Rounding rules do not apply because the Trading Activity Fee is calculated and reported in aggregate.
Discrepancies may result in disciplinary action, depending on the facts and circumstances. Does the TAF apply to trades that are cancelled and subsequently corrected? For a trade that is cancelled and later corrected, the TAF would apply to the corrected trade. If a cancelled trade, however, is not later corrected and re-billed, the TAF would not be assessed. Debt and equity trade corrections should be treated the same for the purposes of the TAF. If the FINRA member clearing firm acts as executing broker, then the Trading Activity Fee should be assessed on the clearing member as executing broker.
If the FINRA member only clears the transaction but does not act as executing party, no fee is assessed on the clearing member. How is the fee assessed for member transactions when the member is on the buy side and the counter party is a customer? The sale of a covered security includes both transactions where the sale is for the account of a customer and transactions where the sale is for the member itself.
For transactions where the sale is for the account of a customer, this means that the TAF is assessed on transactions in which a member purchases the security as principal from a customer for purposes of the TAF, customer is defined as not a broker-dealer or where etrade options exercise fee member acts as agent in the sale of a covered debt security on behalf of a customer.
Is the TAF assessed on a purchase of a covered security from a customer whose account is not held by the member? The TAF is assessed on sales by the member firm and by customer accounts carried by the member firm. In transactions where a member purchases a covered security from a non-FINRA member broker-dealer or customer whose account is not carried by the member, the TAF will not be assessed. When a member matches as agent an order from a customer with an order from a Broker-Dealer, the TAF is assessed as follows:.
When a member matches as agent a buy order from a Broker-Dealer with a sell order from a Broker-Dealer, the TAF is assessed as follows:. Does the Trading Activity Fee apply to transactions effected on a national securities exchange by a dually registered specialist or floor based market maker in a covered equity security?
However, etrade options exercise fee other transactions permitted by Section 11 asuch as bona fide arbitrage or hedge transactions involving a long or short position in a etrade options exercise fee equity security, will be subject to the Trading Activity Fee.
Are all proprietary transactions in exchange-listed securities for which a member is registered as a market maker exempt from the Trading Activity Fee? Only those proprietary transactions executed on a national securities exchange in a member's capacity as an exchange specialist or market maker are excluded from the TAF. As such, only proprietary transactions executed etrade options exercise fee a member in its capacity as an exchange specialist or market maker on the exchange in which the member is a registered exchange specialist or market maker are exempt.
Any transactions executed in a member's etrade options exercise fee as a market maker otherwise than on a national securities exchange or executed etrade options exercise fee an exchange that the member is not a registered exchange specialist or market maker are subject to the TAF.
Further, any other proprietary transactions, such as bona fide arbitrage or hedging transactions, are also subject to the TAF. If I am a registered etrade options exercise fee maker on a national securities exchange and receive an agency order from a FINRA member broker-dealer that I then send to a national securities exchange for execution, is that transaction exempt from the TAF?
When a member acts as agent on behalf of another FINRA member in the etrade options exercise fee of a covered security, the TAF is assessed to the member who is the ultimate seller of the security, not the member acting as agent. If I am a registered market maker on a national securities exchange and receive an order from a customer that I send to a national securities exchange for execution, is that transaction exempt from the TAF?
Are transactions executed by floor based brokers who are dually registered with FINRA and a national securities exchange exempt from the Trading Activity Fee? How is the TAF assessed on equity trades executed in an agency capacity? How is the TAF assessed on equity trades etrade options exercise fee in a riskless principal capacity? The TAF is assessed on equity trades executed in a riskless principal capacity in the same manner as equity trades executed in an agency capacity.
Only equity trades that meet the definition of riskless principal under FINRA transaction reporting rules qualify for riskless principal treatment with respect to the TAF. The application of the TAF to equity riskless principal transactions, as with equity agency transactions, depends on whether your firm received the order from another FINRA member, a non-FINRA member broker-dealer, or a non-broker-dealer customer.
My firm engages in etrade options exercise fee access and direct market access relationships. How is the TAF assessed on transactions effected via such relationships? For purposes of the TAF, the sponsoring member is viewed as acting as agent on behalf of the sponsored participants. As such, if the sponsored client is a FINRA member broker-dealer, the TAF would be assessed to the sponsored member as the ultimate seller of the security.
As part of our clearing services, we provide an electronic order delivery system that allows our correspondents to electronically access other market centers. Our correspondents direct orders through the system to the market center of their choosing and control all aspects of how the order will be executed. However, when trades are executed through this electronic order delivery system, the counter party only sees the identity of the FINRA clearing firm not the non-member correspondent.
Does FINRA view the clearing firm as the executing broker for purposes of the TAF for executions occurring via these electronic order delivery systems? If the clearing firm appears as a party to the trade in any transaction reports required under FINRA etrade options exercise fee reporting rules, the clearing firm would be subject to the TAF.
Are convertible bonds included in the scope etrade options exercise fee the Trading Activity Fee? Convertible debt is included in the scope of the Trading Activity Fee, and the fee rate shall be determined by the facility to which the trade report is submitted i. The scope of the Trading Activity Fee was designed to include only the initial execution of a transaction. Therefore, the TAF will not be assessed on any back office or clearing related transactions that serve only to facilitate the clearance and settlement of a previously executed transaction.
I do not receive the individual components of these compressed clearing entries. Is it permissible to apply the TAF to the single compressed entry rather than the individual etrade options exercise fee that make up the compressed clearing entry? The TAF is applied to the initial execution of a transaction and not to any related clearing entries.
The TAF must therefore be calculated based on the individual components of compressed clearing transactions. It is not permissible to apply the maximum transaction limit based on a compressed clearing entry.
Clearing firms must have a mechanism in place that will allow them to identify the individual components of compressed clearing entries so that the TAF may be properly calculated based on the individual executions. How is the Trading Activity Fee calculated when a FINRA member uses an average price model to effect transactions on etrade options exercise fee agency basis for its customers? A member may etrade options exercise fee to calculate the Trading Activity Fee on either the individual street side executions or on the account level average price confirmation if that member can link the street side executions to the account level average price confirmation s.
However, the methodology chosen by the member to calculate the TAF assessment must be consistently applied to all average price transactions and must be documented by the member.
A customer places an order to sell one million shares of a covered security and the member executes tenshare trades that etrade options exercise fee then allocated to the customer on an average price basis. An investment advisor places an order to sell one million shares of a covered security. The investment advisor subsequently allocates the one million shares to four separate customers.
However, the methodology chosen by the member to calculate the assessment must be consistently applied to all such transactions. Does the TAF apply to transactions in government securities? Treasury Securities, however, are exempt from the TAF. It does not apply to primary market transactions. In addition, transactions that are primary market transactions, but do not meet either definition e. How should firms calculate the TAF on these transactions? When a member reports a transaction in an ABS where the par value or original principal value or original face value does not decrease or in some circumstances, increase over time due to the amortization of assets underlying the security, the total par value is reported to TRACE and not the number of bonds, even if ascertainable as required under FINRA Rule d 2and the TAF is assessed based upon the total par value reported.
However, the requirements to report the size volume of an ABS differ if the security amortizes over time. In the sale of an ABS where the original face value or original principal value is anticipated to decrease or increase over time due to the amortization of assets underlying the security, such as in the sale of a mortgage-backed security, size volume is not specifically reported, but is calculated, and the TAF is assessed, by multiplying a the reported original face value times b the applicable Factor.
Although equity trade reporting rules, as described in Notice to Membersspecifically provide for the reporting of transactions effected in a riskless principal capacity, Etrade options exercise fee and TRACE trade reporting rules do not contain similar provisions. Accordingly, the guidance provided for riskless principal equity transactions does not apply to TRACE and municipal transactions. How is the TAF assessed on debt transactions executed in a principal capacity?
If, however, the original sell order was received from another broker-dealer rather than a customer, the firm acting as the intermediary will only be assessed the TAF once, when the intermediary sells the security as a principal to a customer etrade options exercise fee another dealer. The Etrade options exercise fee for the offsetting purchase will be assessed on the broker-dealer that placed the order to sell with the intermediary. How is the TAF assessed on debt transactions executed in an agency capacity?
The required transaction reports would be as follows:. Broker 1 as agent SELL bonds etrade options exercise fee customer. For purposes of applying the TAF to covered debt transactions, FINRA defines an agency trade as a trade in which a broker-dealer, authorized to act as an intermediary for the account of its customer, buys sells a covered debt security from to a third party e. In the above example, this means that only Broker 2 would be assessed a TAF since Broker 1 has not effected a sale either as principal or on behalf of a customer.
If, however, Broker 1 receives an order etrade options exercise fee a customer to sell bonds and acts as agent in that transaction, the transaction reports would etrade options exercise fee as follows:. Broker 1 etrade options exercise fee agent BUY bonds from customer Report 2: How is the TAF applied to covered debt securities transactions with investment advisors that ultimately allocate the order among multiple customers?
For independent investment advisors that initially execute a block transaction that is later allocated among multiple customers, this means that only the initial execution that is reported to TRACE or the MSRB is subject to the TAF. How does the TAF apply to different types of short-term money market instruments? As a general matter, corporate debt that, at etrade options exercise fee, has a maturity of one year or less is not TRACE eligible and, therefore, is not subject to the TAF.
However, there is no corresponding exemption for short-term municipal securities. Were there any changes to the TAF as a result of the changes in the reporting requirements?