Hi today32,
I agree that my answer to you was not very helpful. Since I have not personally experienced falling victim to Penson's low price security policy I do not have a personal experience as an example. I was called by Track Data the morning of August 15 and was warned that I would be very affected so I canceled all orders and stopped all trading through Penson. I did send off 10 specific questions to Penson via Track Data in mid-august and those answers I received combined with reading the policy is all I have to go on. What I really do not like about the policy is even if you personally make sure that your volume does not exceed the 25% threshold you can still be dragged down and included in the charges by other Penson customers who do exceed the 25%. Also, there is no limit on these fees to protect the customer. On many trades that I did I was well over the 25% threshold, sometimes even 100% on super low volume stocks.
I do not think with only 100 shares that the charge you will face if any will be meaningful, perhaps nothing when you plug your trade into the formula.
((100 x .55)- 55) x (3/365) x 10%
Here is a sub penny example with explainations that I received from Penson if it is helpful for you as an example for the future on other trades:
*NSCC will not provide the actual computation to the trigger the charge (it’s proprietary). However, we do know it’s when the FIRM (Penson) exceeds 25% of the avg 30 day volume in an equity security during a settlement cycle.
*The above firm level computation makes it difficult to manage proactively over a broad customer base of accounts.
Example: symbol PnkJNK averages 400000 a day at .0002
Day 1 Correspondent A has customers sell 30000, 20000 and 50000. $20 customer credit for the sales earned,
Day 2 Correspondent A has customers sell 30000, 20000 and 50000. $20 customer credit for the sales, but $1000 NSCC charge (lock up)
Day 3 Correspondent A has customers sell 30000, 20000 and 50000. $20 customer credit for the sales, but add more $1000 NSCC charge (lock up now 2000)
Correspondent B has a customer sell 100000 $20 customer credit, but add more $1000 NSCC charge (lock up now 3000)
Day 4 no sales and the day 1 sales are settled 300000 out (75%) $2000 NSCC
Day 5 no sales and the day 2 sales are settled 200000 out (50%) $1000 NSCC
Day 6 no sales and the day 3 sales are settled 100000 out (25%) 0 NSCC
Correspondent A has prudently keep his customers at 25% on day 1 (100k).
But because this is an unsettled computation, on day 2 he’s at 50% of the daily average and will have triggered the charge.
On day 3 correspondent A is at 75% and the charge increases. But because this is a firm level computation Correspondent B puts Penson at 100%
And so on and so on…
But what is the NSCC charge? In the above example it’s 1000-3000. This represents a daily firm capital lock-up and means we are financing that balance (not actually charging them the 1000-3000).
We will be passing through those charges at a cost of 10% to the customer to carry the financing. For sub-pennies the math is not pretty…
((Quantity x .01) – Trade value) x (number of days until settlement/365) x 10%
((100000 x .01)- 20) x (3/365) x 10%
980 x .0082192 x .1 = .81 cents or about 4% of the trade cost in this example.
Sec processing processes this fee. Previously it was 15%
AI
