What is a clearing fee?

R

RosyScenario

What is a clearing fee?

For example, for ES futures trades I believe Interactive Brokers charges:
0.85 commission
1.16 exchange fee
0.01 reg. fee
2.02 total, per contract, per side
No "clearing" or other fees, although, beware, there are THE INFAMOUS EXPOSURE FEES.

With AMP Futures, it is difficult to ascertain their exact costs directly from their Web site, but if you are persistent enough to find their separate pricing site it lists an apparently additional 0.5 clearing fee (and the total costs are still not abundantly clear). What is a clearing fee? Is it always charged for all ES trades? Is AMP the only firm that charges this clearing fee (similar to IB being the only firm that charges exposure fees)? What is the exact total cost breakdown for trading one ES contract at AMP Futures? I had sent an email inquiry long ago to AMP with no response. Are there any AMP customers out there who can answer?
 
The CME has two fees. One for clearing and one to use the electronic system called globex. Some refer to both fees as clearing fees. They are what the exchange charges to clear and be the counterparty risk for your trades.
 
Also, for futures, many people typically call the 'clearing fee' the .85c that shows up as commission on IB. Its the fee that's easiest to negotiate.
 
garachen,

The commission that your broker charges for futures is not a clearing fee. So what is the difference? The broker has control over the commission. They can charge what ever they want. The clearing fee comes directly from the exchange that clears the trade. This is very different for equities and options on securities. Securities are not cleared by the exchanges (In the USA). They only provide a place for buyers and sellers to meet. The securities exchanges also bear no counter party risk. The Futures exchanges like the CME, provide a place to execute, clear and provide counter party risk. They charge the clearing fee to cover that.

Most FCMs breakdown all charges for each trade.

bob
 
AMP Future is charging a clearing fee that is a deceptive way of charging extra commission without calling it a commission. It is not in anyway related to mandatory exchange and NFA fees. It is an arbitrary fee that AMP charges to its customers. No other broker does this.

So the total commissions is the commissions + clearing charge. Very sneaky and deceptive.
 
MarketOwl said:
So the total commissions is the commissions + clearing charge. Very sneaky and deceptive.
More...

I can't see what you are looking at but what you described is the correct way to charge a commission and pass though clearing and regulatory fees. (NFA is currently $0.01/side). What I see on my accounts at INTL FC Stone is:

COMMISSION: (for your broker/FCM)
CLEARING FEE: (for the Exchange)
NFA FEE: (for the NFA)

You might see other charges come up too if your trade was executed manually by a trading desk or executed though a third party broker (if your FCM is not a member of that exchange).

Bob
 
rmorse said:
I can't see what you are looking at but what you described is the correct way to charge a commission and pass though clearing and regulatory fees. (NFA is currently $0.01/side). What I see on my accounts at INTL FC Stone is:

COMMISSION: (for your broker/FCM)
CLEARING FEE: (for the Exchange)
NFA FEE: (for the NFA)

You might see other charges come up too if your trade was executed manually by a trading desk or executed though a third party broker (if your FCM is not a member of that exchange).

Bob
More...

INTL FC Stone is including the exchange fee under the term clearing fee. AMP is not. AMP is collecting the clearing fee themselves. It is an arbitary fee that they set on their own.

Clearing fee is a very confusing term because one broker can use it to include exchange fees and another broker uses it as another way of collecting commissions. AMP also charges exchange fees separately.
 
MarketOwl said:
Clearing fee is a very confusing term because one broker can use it to include exchange fees and another broker uses it as another way of collecting commissions. AMP also charges exchange fees separately.
More...


I have seen a few brokers "sneak" in fees. I have no experience with AMP. One broker I know also charges a "Transaction fee" too. When I asked why they charge that and a commission, their explanation was not satisfactory to me.
 
MarketOwl said:
AMP Future is charging a clearing fee that is a deceptive way of charging extra commission without calling it a commission. It is not in anyway related to mandatory exchange and NFA fees. It is an arbitrary fee that AMP charges to its customers. No other broker does this.

So the total commissions is the commissions + clearing charge. Very sneaky and deceptive.
More...
That's precisely the information for which I was looking and that confirms my suspicions. Thank you.

I'm curious as to @AMP_Trading 's response as they have been cited for their deceptive marketing practices in another thread.
 
From a real statment:

Exchange USD 0.64 DR
NFA USD 0.04 DR
Clearing TTnet USD 2.00 DR
XT Fee USD 2.00 DR
Commission USD 1.00 DR

Hope it helps-
 
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