Exchange Process Fees

One question we get asked often is about transaction fees applied to ETF trades. Those are Exchange Process Fees. Source (footnote 5): https://www.schwab.com/pricing

Exchange Process Fee—This is a fee Schwab charges to offset fees imposed on us directly or indirectly by national securities exchanges, self-regulatory organizations, or U.S. option exchanges. Schwab shall have the right to determine the amount of such fees in its reasonable discretion, and such fees may differ from or exceed the actual third-party fees properly paid by Schwab in connection with any transaction. These differences may be caused by various internal and external factors, including, among other things, the rounding methodology used, the use of allocation accounts, transactions or settlement movements for which a fee may not be assessed, timing differences in changes, third-party rate caps and floors, calculation errors, and various other anomalous reasons.

The Securities and Exchange Commission (SEC) assesses transaction fees on national securities exchanges and self-regulatory organizations based on the aggregate dollar amount of sales of certain securities. The SEC recalculates the amount of this fee periodically—at least once per year but sometimes more often. National securities exchanges and self-regulatory organizations offset the transaction fees by charging their member broker-dealers such as Schwab, and Schwab, in turn, offsets this fee by charging you an Exchange Process Fee for covered sell transactions.

Schwab's Exchange Process Fee will rise or fall periodically depending upon the rates set by the SEC, self-regulatory organizations, or by the U.S. option exchanges, as applicable.