CME Group - ECN Fees

[mumabbas 0]

Hello all, as many of you may or may not have realized, CMEG has decided to place a significant increase on their ECN fees. 

It's come to a point where I'm paying double the amount of commissions in ECN fees and I'm becoming pretty frustrated with it. I emailed back and forth with CMEG to try and negotiate a new fee structure as some of you suggested but they continue to tell me that I should speak with the broker/clearing firm for my account and I'm unsure who that is or where to find them. I think it may be Interactive Brokers but they are just one firm on a whole list of clearing firms they retain.

If anyone could help by pointing us in the right direction, or maybe even just sharing your story, then maybe myself and a few others could benefit from it.

[Andrew Aziz 97]

Hi everyone, 

Yes this issue has brought to my attention by few traders. They sent me their statement and I am looking at it. Here are my thoughts: 

1. 1CMEG apparently did not charge ECN fees until August 2018, and they actually lost money on it. This was an  internal mistake from their side. So many traders are surprised seeing ECN fees, but in fact, they are actually very normal and every broker is charging  them. So part of frustration was because many people were shocked seeing them, while they were benefiting from a free ECN rebates in the past.
2. From what I see, CMEG ECN fees are normal compare to other brokers. The list is here: https://www.cmelitegroup.com/rates-and-conditions/trade-fees As you see, most ECNs are chargin around $0.003-0.004 per share for marketable orders (removing liquidity). This advertised fees  is also standard with other brokers such as SpeedTrader, CenterPoint or IB.  https://centerpointsecurities.com/stock-broker-dealer/pricing-brokerage-fees/
3. I looked at few of my trades, and I saw IB also charges me in the range of 0.003 per share ECN fees in addition to 0.002 tiered per share commission trucutre. See below my IB commissions on 3 trades on MU and AMD.

My calculation for IB with 0.002 per share commission shows: 

One of our trades ECN fee:

Overall, I think ECN fees of CMEG is not unreasonable. I see why most people got surprised, because they did not have it on August and before. But you should know that CMEG made a mistake so far by not charging those properly. ECN fees are common to be charged to traders by all brokers.

Am I missing something?

[Norm 45]

Andrew,

 

Based on these calculations, wouldn't it be better to use IB's fixed commission plan since it is $0.005 per share and is INCLUSIVE of ECN fees?

 

 

[Andrew Aziz 97]

Are you sure it is all inclusive? I read this:

 

Quote

Our Fixed pricing for stocks, ETFs (Exchange Traded Products, or ETPs) and warrants charges a fixed amount per share or a set percent of trade value, and includes all IB commissions, exchange and most regulatory fees with the exception of the transaction fees, which are passed through on all stock sales.

 

It seems there is an "exception transaction fees".

[Norm 45]

We might have to check, but a little bit down the page (same one you quoted), it says this is transaction fees:

Quote

Transaction Fees

(Stocks, ETF, Warrants, Rights, Voting Trust Certificates)	USD 0.0000130 * Value of Aggregate Sales
FINRA Trading Activity Fee	USD 0.000119 * Quantity Sold 8

The tiered plan says:

Quote

Our transparent Tiered pricing for stocks, ETFs (Exchange Traded Products, or ETPs) and warrants includes our low broker commission, which decreases depending on volume, plus exchange, regulatory, and clearing fees.

I take that as the fixed plan *includes* exchange fees and tiered does not. The transaction fees quoted are extremely small, almost a rounding error.

[Andrew Aziz 97]

In this case, it may be fixed better for low volume traders. Honestly, I never looked into it. I am in 0.002 tiered structure 300K-3M. So for me, it probably will be the same. But for low volume traders, it may be better to go with fixed I suppose. 

Do IB have info on which one is more suitable  to which type of traders?

[Fernando Samora 11]

Thanks Andrew! helps clear the air.

 

[Brendon 146]

I deleted my previous post, in short my calculations were incorrect due to testing the ECN rate in their sim. Thanks Andrew for helping!! 

---

For all traders that don't go over a $25,000 position size, take ~4 trades a day + scaling out ~3 times (a normal scenario for a new trader).

I would like to point out if you are trading let's say 5K shares a day (~average share price you are trading of $20) with an ECN rate of $0.004 per share you would pay $20 in ECN fees. Let's also say you take 4 trades and scale out 3 times. 4x3 = 12 tickets x $2.95 = $35.40 in commission plus ECN of $20.

A total of $55.40 of fees for trading that day. 

 

Now if you use SureTrader at $4.95 per ticket (including ECN fees) that's 12 tickets x $4.95 = $59.40

A total of $59.40 of fees for trading that day. 

 

Overall winner = CMEG, +1 for CMEG also because they do not restrict margin on most stocks like SureTrader does.

 

*if your average share price is ~$15 is may be slightly cheaper for SureTrader, but only by a few dollars...

 

If my above calculations make more sense this time use CMEG! If you are trading lower priced stocks (under $10 primarily, either trade less shares (under 5K) or consider another broker like IB. Fernando may have more insight on that. 

 

Thanks Andrew for helping me rethink their free structure and providing us with a good junior broker for new traders to use.

 

Hopefully my above scenario can help new traders decide on their broker!

 

 

Edited September 25, 2018 by Brendon
*Simulator showing incorrect rate*

[Andrew Aziz 97]

Thanks Brandon. Welcome back!

Does SureTrader 4.95 flat fee includes ECN fees? Is that screenshot from simulator trtade? Problem with simulator Account Report is they are not accurate, because you dont 'really get filled and different ECNs have different fees. NSDQ is one of the most expensive routes. 

[Brendon 146]

Hi Andrew, 

I confirmed today that SureTrader $4.95 flat free does include ECN fees. That screenshot is from CMEG's simulator so that may be why the rate is different...their Trade Fees used are based on the routes off their website and a simulator cannot know the route executed. Thank you for pointing that out if that is the case! I know Brandon C. was trading live today so he may be a better resource to help confirm the ECN cost. 

I have to revised my conclusions on CMEG and ECN charges.

For the purposes of using CMEG as a 'gateway' broker they fill that niche very well and are competitively priced better than the competition and SureTrader.

I will revise my above post. Thanks Andrew for checking into this!!!

Edited September 25, 2018 by Brendon

[Andrew Aziz 97]

Thanks. In all honesty, I am not trying to defend CMEG or anyone else.

I just want to look into the best option for traders. For under PDT traders, I found CMEG is  best so far, but I do not swear on them! For over PDT traders, I recommend IB/DAS or CenterPoint Securities. Each has its own pros and cons.

Which brokers they want to choose is eventually traders' decision after getting all the information. 

[Meirlandau10 13]

@Andrew Aziz in what way is IB better than Centerpoint?

[Andrew Aziz 97]

They provide DAS platform for free, for active traders who make over $350 commission. 

[Meirlandau10 13]

Yes,that’s Centerpoint,I’m asking how IB is better than Centerpoint?

[Andrew Aziz 97]

IB commission structure is slightly bit better, but not much.