Under Section 31 of the Securities Exchange Act of 1934, U.S. national securities exchanges are obligated to pay transaction fees to the SEC based on the volume of securities that are sold on their markets. Exchange rules require their broker-dealer members to pay a share of these fees who, in turn, pass the responsibility of paying the fees to their customers.

This fee is intended to allow the SEC to recover costs associated with its supervision and regulation of the U.S. securities markets and securities professionals. It applies to stocks, options and single stock futures (on a round turn basis); however, IB does not pass on the fee in the case of stock trades executed under the flat rate plan nor single stock futures trades.  Note that this fee is assessed only to the sale side of security transactions, thereby applying to the grantor of an option (fee based upon the option premium received at time of sale) and the exerciser of a put or call assignee (fee based upon option strike price).

As of the start of fiscal year 2011 the fee was assessed at a rate of $0.0000192 per $1.00 of sales proceeds, however, the rate is subject to annual and,in some cases, mid-year adjustments should realized transaction volume generate fees sufficiently below or in excess of targeted funding levels.¹

Examples of the transactions impacted by this fee and sample calculations are outlined in the table below.

¹Information regarding current Section 31 fees may be found on the SEC's Frequently Requested Documents page located at: http://www.sec.gov/divisions/marketreg/mrfreqreq.shtml#feerate

Clients and as well as prospective clients are encouraged to review our website where fees are outlined in detail. An overview of the most common fees is provided below:

1. Commissions - vary by product type and listing exchange and whether you elect a bundled (all in) or unbundled plan. In the case of US stocks, for example, we charge $0.005 per share with a minimum per trade of $1.00.

2. Interest - interest is charged on margin debit balances and IB uses internationally recognized benchmarks on overnight deposits as a basis for determining interest rates. We then apply a spread around the benchmark interest rate (“BM”) in tiers, such that larger cash balances receive increasingly better rates, to determine an effective rate.  For example, in the case of USD denominated loans, the benchmark rate is the Fed Funds effective rate and a spread of 1.5% is added to the benchmark for balances up to $100,000.  In addition, individuals who short stock should be aware of special fees expressed in terms of daily interest where the stock borrowed to cover the short stock sale is considered 'hard-to-borrow'. 

 3. Exchange Fees - again vary by product type and exchange. For example, in the case of US securities options, certain exchanges charge a fee for removing liquidity (market order or marketable limit order) and provide payments for orders which add liquidity (limit order). In addition, many exchanges charge fees for orders which are canceled or modified.

4. Market Data - you are not required to subscribe to market data through IB but if you do you may incur a monthly fee which is dependent upon the vendor exchange and their subscription offering. We provide a Market Data Assistant tool which assists in selecting the appropriate market data subscription service available based upon the product you wish to trade. To access, log into Account Management click on the Tools icon and then the IB Market Data Assistant link.

5. Minimum Monthly Activity Fee - as we cater to active traders we require accounts to generate a minimum in commissions each month or be charged the difference as an activity fee. The minimum is $10 per month for accounts maintaining a balance above $2,000 and $20 per month for accounts whose equity has fallen below $2,000.

6. Miscellaneous - IB allows for one free withdrawal per month and charges a fee for each subsequent withdrawal. In addition, there are certain pass-through fees for trade bust requests, options and futures exercise & assignments and ADR custodian fees.

For additional information, we recommend visiting our website at ww.interactivebrokers.com and from the Individuals page select the Fees menu option at the top of the page.

In the case of any stock option associated with a merger in which the underlying security has been converted to 100% cash after December 31, 2007, the OCC will accelerate its expiration.  The new expiration date for such options will be accelerated to the nearest standard equity expiration, unless the cash conversion takes place after the Tuesday within an expiration week, in which case the expiration date for all contracts not already expiring that week will be deferred until the following month’s expiration.

Note that this acceleration does not impact the automatic exercise threshold, through which all options having a strike price that is in-the-money by at least $0.01 will be automatically exercised by OCC.  Nor does it impact the date of the cash settlement attributable to the exercise which remains at T+3.

Also note that this acceleration does not affect options which were converted to cash on or before December 31, 2007 which will remain valid series until their original expiration date has been reached.

Please note that futures contracts, by default, do not roll over at expiration.  The TWS trading platform, however, does provide a feature referred to as the 'Automatic Futures Rollover Message' which, when activated, automatically displays a message on login eight days prior to expiration which allows one to select contracts for which the market data lines can be updated with the new front-month contracts.  Note that this will only serve to update the market data line and will not execute a trade unless the accountholder acts to transmit an order.  Any orders transmitted for roll over purposes are subject to the standard commission and fee schedule. 

The following steps are to be performed in order to activate this feature:

1. Click the Configure wrench icon in the trading window

2. In the left pane of Global Configuration, select General;

3. In the right pane, check Auto future rollover;

To view eligible futures rollovers within TWS, select Futures Rollover from the Ticker menu and then check all contracts that you want automatically updated to the new front month.

Also note that with the exception of certain currency futures contracts, IB does not allow for the actual physical delivery of underlying commodities.  Contracts which settle by physical delivery must be rolled over or closed out prior to a close-out deadline or face forced liquidation by IB.   Please refer to the website under the Trading and then Delivery, Exercise & Actions menu options for additional details as this deadline will vary by product.