Fees & Interest

Am I currently using margin?

Investing in margin is borrowing cash to open a new position. If the aggregate cash balance in a given account is a debit (negative balance), then funds are being borrowed and the loan is subject to interest fees. Note that even if the aggregate cash balance is a credit, a loan may still remain resulting in balance netting or timing differences. For additional information, please see How to determine if you are borrowing funds from MEXEM in the MEXEM Knowledge Base.

Why am I paying interest?

Interest can be charged to accounts for several reasons, but it is most frequently charged when you are borrowing funds from MEXEM. This is generally associated with carrying a debit settled cash balance. However, customers should also note that carrying a high credit balance in specific currencies might also be subject to paying credit interest fees due to the negative benchmark rates presently inflicted by a few central banking systems. Our present rates, with the applicable benchmarks included, are available on the  Interest & Financing page of our website. Clients should note, accounts containing a Net Asset Value (NAV) of $100,000 (or equivalent) or more will be paid interest at the full rate for which they are entitled. Accounts with NAV of less than $100,000 (or equivalent) will receive interest at rates comparable to the size of the account. For example, an account with NAV of $50,000 will earn credit interest at a rate equal to one-half the rait paid by IBKR to accounts with a NAV of $100,000 or more. It is vital to consider that short stock collateral and futures risk margin are backed out of settled cash amounts when deciding interest. On the other hand, short stock positions may be subject to hard to borrow fees, as described on the Securities Financing page of our website. Interest estimations are made on a one day lag and accruals will be reflected on accounts one the estimated sum surpasses a posting threshold of $1.00 (or equivalent).

How can I avoid the monthly activity fee?

The monthly activity fee may be waived if the account has an average Net Liquidation Value greater than or equal to USD 100,000 (or non-USD equivalent). The monthly activity fee may also be waived based on commissions generated. The monthly activity is waived the first three full calendar months after a new account is opened. For information on the commission requirements, please refer to our website under Pricing followed by Account Minimums.

What is the difference between the Fee Rate and the Rebate Rate?

The Fee Rate represents the indicative rate (generally expressed as an interest rate) that the lender assesses to the borrower of the shares. This is the indicative borrow fee rate clients will pay MEXEM to short a stock. It is a debit from the account. The lender will then reinvest the cash collateral posted by the borrower to secure return of the shares and may provide a partial rebate of those earnings back to borrower's broker (generally equal to the Fed Funds Rate in the case of USD stock loans). Many brokers do not pass any part of this rebate to retail accounts although MEXEM does and the Rebate Rate is an indication of the net of the Fee Rate and any rebate offered. For example, assume stock ABC is hard-to-borrow and carries a Fee Rate of 20%. If the Fed Funds Rate and rebate provided is 2% then the Rebate rate is -18% (note that a negative Rebate Rate reflects a net charge to the borrower). The Rebate Rate column signifies the top tier Short Sales Proceeds Interest (SSIP) rate, which is the Fed Funds or other currency-relevant Benchmark rate less the top tier Short Sale Proceeds Interest spread, minus the borrow fee. This is meant to inform clients of the credit interest they will receive on their short stock cash proceeds. More information on securities financing interest rates can be found on our website.

How do I update cost basis information for transferred securities?

The cost basis information associated with transferred positions (e.g., acquisition date and price) classified as covered is typically sent by the transferor sometime after the transfer has settled and, in certain cases, the transferor may be subject to IRS rules which require that this information be provided within 15 days of the transfer date. Up until the time the transferor provides the cost basis information, MEXEM will classify positions as non-covered and assign default cost basis values where the acquisition date is set to the date of transfer and the cost to the closing price of the security on the date of transfer. Clients may update the cost basis for transferred securities by logging in to Client Portal/Account Management and selecting the Reports and then Tax menu options to open the Tax Reports window. Then click on the gear-shaped icon alongside Transferred Positions in the Cost Basis panel to see a list of position transfers by date. Please note: The cost basis of covered positions will automatically update from your manual entry to the basis when sent by the transferor. For additional information, see: Are clients allowed to change cost basis information? When will the cost basis of my position transfer be updated? Position Transfer Basis in the MEXEM Users' Guide.

What is the margin requirement for shorting stocks?

Margin details can be found on the Margin page of the MEXEM website, which you can access by clicking the Products menu option followed by Margin (under Investment Products). The minimum margin requirement for shorting a stock is 30%. In addition, in order to hold a short position you must have a margin account which has a regulatory requirement to maintain a minimum balance of 2,000 USD. Please note, MEXEM's house margins for short stock can exceed any regulatory minimum requirement. We recommend using the Check Margin Impact feature to preview a stock's margin requirement prior to submitting an order. Please feel free to visit the MEXEM Knowledge Base for additional information.

How much do you charge for options?

For the US market, MEXEM's options commission rate starts at USD 0.65 per contract plus exchange, regulatory, transaction and clearing fees. We use a tiered commission structure that will reduce your cost per contract as your trading volume increases. Please Note: The commission charged for a US option trade is higher on a sale than on a purchase because Transaction Fees are only charged on sell orders. For markets in Europe and Asia, MEXEM provides both fixed and tiered pricing structures. The costs will vary based on the exchange and product traded. More information on our commission structure can be found in our website.

Why was I charged a fee for a wire deposit?

Neither MEXEM or its agent bank charges for electronic deposits of any currency other than MXN. If you are being charged it is likely because your bank is using the services of a correspondent bank to effect cross-border transfers. As this relationship is not controlled or determined by MEXEM (nor do we benefit by the fee), you would need to discuss with your bank the relationships they maintain and how that impacts your costs.

How do I determine whether there is a cost to borrow a stock before entering a short sale order in TWS?

When you sell stock short, MEXEM must locate and borrow shares to make delivery to the purchaser at settlement. Whether or not there is a cost to borrow those shares depends upon the supply of shares available to borrow and the demand from other short sellers to borrow shares. MEXEM provides a number of tools to estimate the cost to borrow before entering your order. Note that borrow costs tend to fluctuate daily along with supply and demand and the actual cost can only be decided at the end of the day when the essential borrows have been sourced. Outlined below are tools to decide the indicative borrow rate: The Shortable column within TWS shows the number of shares available and the projected borrow rate for each of the stocks you are monitoring. See: How do I see whether a stock is shortable on TWS? The SLB Rates tool within TWS. To open the tool, select the SLB Rates option from the Analytical Tools menu located on the TWS top menu bar. Then, enter the symbol for the stock of interest. This tool also provides a bar graph of historical rates for the prior 10 days. More information and examples on calculating the cost of borrowing stocks at Mexem can be found on our website.

When will my dividend be paid?

If you are eligible to receive a dividend payment (please see the MEXEM Knowledge Base), an accrual representing the dividend expected to be paid by the issuer at a future date will be posted to your account balance on the Ex-Dividend Date. Upon receipt of the funds from the depository or clearing agent, MEXEM will reverse the accrual and will post the allocated funds to the cash balance of the account. This adjustment will usually occur on the announced Payment Date; however clients should note that in the event MEXEM does not receive the funds in a timely manner, the dividend will remain in an accrued state until the funds have fully allocated. Account holders may track all of this information, including the date at which the dividend is expected to be paid and its amount by creating a custom activity statement that includes the section titled Open Dividend Accruals. See: How do I create a custom activity statement?

What commissions do you charge for Mutual Funds?

The transaction fee for North American and Global mutual funds is the lesser of 3% of the Trade Value or USD 14.95, per transaction. For European mutual funds we provide both Fixed and Tiered pricing structures. The Fixed commission is 0.1% of the Trade Value (with a minimum of EUR 4.00 and a maximum of EUR 29.00, per order). The Tiered commission starts at 0.08% of the Trade Value (with a minimum of EUR 1.25 and a maximum of EUR 29.00, per order) and decreases with monthly traded volume, plus External Fees. Additional information on mutual fund commissions can be found on our website. Please note, MEXEM also provides No Transaction Fee Funds.

How much do you charge for futures?

MEXEM provides clients the choice between a fixed rate commission structure and a tiered commission structure for futures and options on futures. For the U.S. market, MEXEM's futures commission rate starts at USD 0.85 per contract plus exchange, regulatory and clearing fees. For markets in Europe and Asia, MEXEM provides an all in fixed rate pricing structure. The costs will vary based on the exchange and product traded. For more information on MEXEM's commission structure, please visit our website and select Pricing followed by Commissions.

How often does interest accrue?

Interest debits and credits are accrued daily and determined based upon the settled cash balance for each currency. If the accrual is less than a $1.00 (or the minimum unit for the currency type held), it will accumulate with subsequent accruals and be posted to the account once it reaches $1.00. Accruals are posted to cash once per month generally in the first week of the month after accrual. Details regarding interest accruals are posted to the Interest Accrual section of the activity statement and aggregate accruals are included in the account Net Asset Value located at the top of the activity statement. For more information on how interest is estimated, please refer to the Interest & Financing section of our homepage.

How are withholding taxes determined on dividends?

In the event you hold a position over the ex-dividend date, your dividend may be subject to withholding tax. Depending on which entity of MEXEM your account is opened with, and your country of legal residence, MEXEM might act as a withholding agent and apply the applicable treaty rates, or the tax might be applied by our clearing agent prior to receipt. In such a case, holders may be unable to take advantage of any country specific rates which may exist. Clients should consult with a tax advisor for assistance in making a claim for a tax refund on a dividend.

Is there a fee for TWS login?

There is no TWS login fee. MEXEM does not charge for any of our trading platforms or the various tools included. For additional information on Other Fees and Required Minimum Activity, please visit the MEXEM website.

Who is subject to the dividend equivalent withholding tax?

The tax applies to qualifying positions held in an account of a non-U.S. taxpayer. It does not apply to U.S. taxpayers. Accounts of non-U.S. taxpayers generally are evidenced by the submission of an IRS Form W-8 and can include the following account types: individual, joint, organization and trust.

Are market data fees prorated?

Research and market data subscriptions are billed on a monthly cycle in advance and if you manage a subscription for any period (even less than a full day) during the month, you will be obligated to pay as if you were subscribed for the entire month. Note that exchanges do not prorate subscription fees for mid-month elections nor do they offer refunds for subscriptions cancelled mid month. If you cancel a subscription mid-month, however, you will continue to receive the service for the month in which you are billed for the service. Additional information on market data fees can be found on our website.

Are non-U.S. persons subject to U.S. taxes on trading profits?

If you are a non-US person, you will be notified to submit a Form W8 during the application. This will designate your country of taxation and, if it is not the US, you are not subject to US taxes on your trading profits. Virtually every country, however, imposes withholding taxes on dividends paid by local corporations to non-residents. The default rate is 30% although it may be lower if an international tax treaty involving your country exists.

Is the interest rate posted to the website an annual rate?

The interest rate as posted to the website is expressed as an annual percentage rate, however the rate for any one currency is based upon a benchmark that can change daily. As a result, the margin loan rate posted on any one day may not be the exact rate that an account holder would be charged if they were to manage a loan for an entire year. Similarly, the credit rate posted on any one day may not be the exact rate that an account holder would be receive if they were to manage a credit, or long cash balance, for an entire year.

How is the margin requirement determined for stock carried in a Portfolio Margin account?

The answer depends upon a number of factors including the particular stock and its historical price activity, the size of the position and what other positions you carry in the account. In general, however, Portfolio Margin allows for a requirement as low as 15%, assuming you are carrying a diversified portfolio of low volatility securities. For a single stock, the requirement will be a minimum of 30%, but could be higher if the stock has exhibited a high degree of volatility over the past 30 days or has increased in price substantially over the past year. Additionally, a concentration charge would apply if the position represented at least 1% of the shares outstanding. Find additional information on Portfolio Margin in the MEXEM website. Given all of the above, the simplest way to decide the margin requirement for a given position is to use the Check Margin feature in the TWS. For more information, including instructions for using this feature, see the MEXEM Knowledge Base.

What is the calculation used for interest?

MEXEM uses 4 steps to calculate the daily interest payable or receivable on cash balances. Interest is calculated on the end of day Settled Cash Balance. If you sell a stock short and close the short in the same trading session, borrow fees would not be applied as both the opening sale and closing purchase would settle on the same day. Information on how interest is calculated may be found on our website under Interest and Financing / Calculations.

What fees am I charged on an assignment or exercise?

Generally, no fees will be assessed on stock option exercise / assignment activity. Australian and Hong Kong stock options are an exception where fees will be passed through. US stock options will be subject to Section 31 and FINRA TAF regulatory fees. Index options will generally be charged standard commissions, with the exception of US index option exercise / assignment activity which will not be subject to fees. Futures and future options will be subject to standard commissions for expiration or exercise/assignments. For additional information, please refer to the Exercise and Assignment table and the Commissions page of the MEXEM website.

How much do you charge for bonds?

Fixed Income uses a Tiered commission structure. Commissions are calculated based on volume and any external fees are added on. For U.S. products, MEXEM's fixed income commission rate starts at 0.1%* Face Value (10 bps) plus external fees. For European products, MEXEM's fixed income commission rate starts at 0.1%* Trade Value (10 bps) plus external fees. For Asian-Pacific products, MEXEMs fixed income commission rate starts at 0.08%* Trade Value (8 bps) plus external fees. For more information on MEXEM's commission structure, please visit our website and select Pricing followed by Commissions.

How can I get back the tax on dividends on French stocks?

Clients need to complete Forms 5000 and 5001 as described in the French Withholding Tax Reclaim Knowledge Base article, then contact Client Services via Message Center and provide the details of the dividends for which they are requesting service. A processing fee applies to each of such requests.

What commissions do you charge for Hong Kong stocks?

MEXEM provides two types of commission structures: Fixed and Tiered. Commission for the Fixed structure is 0.08% of trade value with a minimum per order of HKD 18. Plus the government stamp duty (0.1% rounded up to the nearest 1.00 for SEHK stocks, normally applies only to stocks) and SFC transaction levy (0.0027%, normally applies to stocks and warrants) will be passed through to all clients regardless of commission model. You can find Hong Kong Stock Exchange (SEHK) Exchange, Clearing and Pass-through Fees on our website. Additional commission information including details on the Tiered pricing structure for SEHK can be found on our website.

Will my dividend automatically convert to my base currency?

MEXEM does not act to automatically convert currency balances back to the Base Currency as this action would require assumptions as to the account holder's desired currency exposure as well as the trade price at which they would be willing to close the position.

Where did the charge in my activity statement's Fees section for ADR Fee come from?

Various Central Securities Depositories such as the Depository Trust Company (DTC), Euroclear or Clearstream collect custody fees on behalf of ADR agents for DRs which do not pay periodic dividends. The fees are similar to dividends as they have an effective record date, they are deducted by the applicable depository in standard billing and will be passed to accounts which held the ADR on the record date. On a best-efforts basis, a notification will be sent to holders of ADRs referencing the possibility that the account will be charged an ADR fee of between 0.01-0.03 USD per share at some time in the future. The ADR charges, once processed, can be found in the Activity Statement in the Fees section for the date they were posted to your account. For more information on the fee, we recommend that you consult the ADR prospectus. You can also visit the SEC website's "Investor Bulletin: American Depository Receipts" (scroll down to the "What fees are charged to ADR Investors" section).

Am I subject to the US stock commission schedule if I trade US stocks but am not a US resident?

Commissions are based on product type and listing exchange and do not vary by the client's country of residence. For an overview of commission structures by asset class, please refer to our website under the Pricing menu followed by Commissions.

How can I get old account statements?

Daily activity statements are available online through MEXEM via Client Portal/Account Management for the past 4 years, monthly activity statements for the past 60 months and annual statements for the past 5 years. Statements are available for an additional 2 years beyond this and are available in electronic format only (delivered via email). Charges vary by currency, and the fee schedule can be found on our website under the Pricing menu followed by Other Fees. A closed account will still have access to Client Portal, where you can download closed account statements no more than 5 years old selecting menu Reports and Statements. Click on the displayed account number in the light blue oval in the upper part of the page to open the Account Selector side window. In the Account Selector, click on the Filter (funnel) icon, expand the Account Status section, check "Close" and click Apply. Choose the closed account number and click Continue. Note: MEXEM does not usually provide daily statements in lieu of monthly or annual statements. For closed accounts, payment may be made in the form of check. In the case of active accounts, the account's cash balance will be debited. Requests for archived statements may be made via web ticket and checks are to be mailed to MEXEM, Attn: Funds & Banking, 209 S La Salle St. Suite 1000, Chicago, IL 60604 USA IMPORTANT NOTE Cashier's Checks, Official Checks, Teller's Checks and Banker's checks issued by banks are the recommended forms of payment. Personal checks and checks issued by a credit union or bill payment service are subject to a six business day hold period, after which the requested statements will be issued. More information on viewing statements in Client Portal can be found in our Users' Guide.

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