I got this from IB earlier in the week (attached picture). Did those of you on other brokers get something similar?
If I did my quick maths correctly (based on the average # of shares I typically trade), this will roughly increase my round transaction costs (buy + sell) by +50% to +100%
It also means that higher turnover systems are getting more penalized…
There was also recently a new data fee → quote: “subscription to the NASDAQ Global Index Data Service, a quote feed which is currently provided at no charge but which will be subject to a monthly fee starting August 1, 2016.”
Looks like the exchanges are trying to make up for loss of revenues (less HFT?)…
Jerome,
I hope your math is wrong. IB lists fixed commission as 0.05% of the trade value for the United Kingdom (US stocks) on their web site.
0.000119 USD is only 0.0119% for a $1 stock which would be your worst possible case. Your average would have to be substantially less. And this is only for the sell side. So assuming 0.05% is you cost per trade then your sell trade commission would increase to 0.06119% for a one dollar stock. This would be a 12% increase in your commissions (round trip buy and sell) but again for $1 stocks. If my math is correct then you will not come close to a 50% or 100% increase in you commissions.
I am sure I am missing something–probably you get a discount for higher volumes but you mentioned fixed pricing. I wrote this on the off chance that it might be a math error (or currency conversion error) and you could enjoy the rest of the weekend.
Your response prompted me to look a bit more closely. I went too fast and was off by a factor 100. After verification, typically the cost increase will be about 1% on the whole round trip (i.e. Buy & sell). so this is fine.
One of their features will be Robinhood instant. From their web site: “Get immediate access to funds from selling stock. That means you can reinvest those funds without waiting three days for settlement.”
This will avoid the “Free Rider” problem. This is probably one of the important features Chaim means.
They do not adept IRA accounts now.
So I could buy or sell a stock as many times as I want during the day? I could almost duplicate some of IB’s Algos manually. Kind of a hassle. But no commissions? Wow!
For lower priced stocks at IB, $0.005 per share up to 0.5% of of the trade value is not acceptable for me. 0.5% commission on top of say another 0.5% for slippage: Robinhood in reverse!!! Not just Robinhood in reverse put a reason some Ports just will not work well with IB. I would almost have to use IB for stocks > $10 per share and use Robinhood (or another broker) for the stocks under $10.
Compared to brokers besides IB: you mean I could get a partial fill on a limit order, submit another limit order and not commission for either order? Or multiple market orders during the day to reduce the market impact?
IB does have a convenient method for giving them money. I cannot wait until Robinhood allows IRA accounts.
IB’s margin interest rates are the lowest available as far as I know, by an order of magnitude over most brokers.
[/quote]Many of IB’s rates are the lowest in the industry. From what I gather it’s because IB computerizes to cut costs. But IB is not as computerized as possible. Robin Hood aims to computerize just about everything. So Robin Hood may end up having even lower costs (by an order of magnitude) less than IB once Robin Hood finishes rolling out their features and operates on a huge scale.
IB may be the low cost leader but they are awful with customer service. My last few calls to them averaged a 20 minute hold followed by interacting with a rep with a condescending and rude attitude. The other major brokerages answer the phone within 3 minutes and are friendly and helpful. This poor customer service will seriously damage their business once another low cost broker, like Robin Hood, gets more scale.
I do other stuff while I am on hold but my point is that the low quality of their customer is proportional to their low trading fees. As such once Robin Hood gets to scale there likely will be a large shift from IB to RH due to the lack of customer loyalty.
You are making a big assumption that Robin Hood will give better customer service (for free). You know the saying “you always get what you pay for”.
Its like when brokers dropped the deep discount commissions to under $10 way back when. We still pay the same or more, its just that there is no transparency. The market makers get their rewards in spreads or they have been replaced by HFTs which get their money regardless.
Actually Steve I am not making that assumption. Robin Hood should be less expensive than IB. I know that IB has awful CS so if I switch to RH once they have scale and I get equivalent crappy customer service then at least I have cut my trading costs. The other large brokerages (TDA, Fidelity, Schwab, …) at least do not encourage one to leave by treating customers like crap.
A few weeks ago I switched my IB account to tiered or un-bundled pricing.
Before the change (without the planned price increase) my average cost was .54 cents per share.
After the change I average .38 cents per share if I take liquidity, and .27 cents per share if I make liquidity.
My average cost for all trades is .294 cents per share.
