SEC Fee, TAF, and currency exchange costs: expenses incurred in US stock trading.
Distinguish between taxes and fees, and check selling regulatory costs, brokerage commissions, currency exchange, and product costs.
Table of contents
Remember this first
First, 3 things to remember
- 1The SEC Fee is a regulatory cost related to trading, distinct from Korean capital gains tax.
- 2You need to verify the rate, minimum charge, rounding, and how the brokerage passes on the cost.
- 3Even if trading commissions are free, currency exchange, spreads, and product costs may still apply.
What is the SEC Fee?
Section 31 fees are transaction-related costs imposed by the SEC on self-regulatory organizations, etc., and may be passed on to customers through brokerages. While usually seen in connection with the sale of subject securities, they are different from the Korean capital gains tax imposed on trading profits.
The SEC notice verified on October 20, 2026, states that the applicable transaction rate effective from April 4, 2026, is 20.60 USD per 1,000,000 USD. The percentage is 0.00206%. The effective date and subsequent change notices take precedence, and this is not a permanent rate.
Distinguish between fractional shares and minimum costs.
If you simply apply the official rate, a sale of 10,000 dollars results in 10,000×0.0000206=0.206 dollars. The actual amount charged to the customer may vary depending on the brokerage's rounding, minimum amount, order aggregation method, and exemption policies.
Do not use 'minimum 0.01 USD' as the SEC statutory customer minimum common to all brokerage firms. You must check the specific brokerage firm's notice for the effective date and customer fee schedule. Even if you sell at a loss, costs based on the transaction amount may still be incurred.
TAF is a separate item.
FINRA's Trading Activity Fee is a regulatory cost for member firms, and for subject stock sales, it is structured with a per-share rate and a per-transaction cap. The calculation unit and ratio for the sale amount differ from the SEC Fee.
FINRA official rates may change, or the way brokerage firms pass them on to customers may differ. Check how SEC fees, TAF, and other local costs are aggregated in your transaction statement and do not double-count the same costs.
Costs that remain even with commission-free trading.
Frequent trading, like day trading, causes small costs and bid-ask spreads to accumulate. The items below have different application statuses and conditions.
| Item | Conditions to check |
|---|---|
| Trading commissions | Market, order channel, event period, and minimum amount. |
| Currency exchange costs | Bid-ask exchange rate spreads, preferential criteria, and application times |
| Regulatory fees. | SEC fee and TAF rates and client billing methods |
| ADR fees | Custody, dividend processing, and currency exchange fees. |
| ETF expenses | Fund internal expense ratios and tracking differences |
| Transaction friction. | Bid-ask spread, slippage, and liquidity |
Record taxes, expenses, and investment gains/losses separately
Compare the deposit amount, which is the sale proceeds minus fees, with the necessary expenses and income calculations for capital gains tax reporting. Since not all displayed fees are deductible in the same way under tax law, check your brokerage's tax-related documents.
Record the commission rate along with the date you checked the service guide. A currency exchange preferential rate of 95% may not mean a 95% discount on the exchange amount, but rather a discount structure on the set spread. It is more accurate to compare using the actual applied exchange rate.
You should not make such assumptions
“Paying the SEC fee means you have also paid capital gains tax on your U.S. stocks.”
These are separate items. Even if you have paid regulatory transaction fees, you must separately verify your annual capital gains tax reporting and payment in Korea.
Check what you have read.
- Have you checked the effective date of the rates?
- Did you distinguish between amount-based and per-share criteria?
- Have you checked the brokerage's minimum charges and rounding policies?
- Have you included currency exchange, spread, and product costs?
Apply what you read to the actual screen
Try it on WAPE
Source and scope of verification
Reviewed · Version 1
- Section 31 Transaction Fee Rate Advisory for Fiscal Year 2026New window
SEC · Verify 2026-10-20
Effective 4 4, 2026: 20.60 USD per 1,000,000 USD for applicable transactions - Fee Rate AdvisoriesNew window
SEC · Verify 2026-10-20
Distinction between transaction costs and issuance registration fees; verification of current rates - Schedule A, Section 1 – Member Regulatory FeesNew window
FINRA · Verify 2026-10-20
TAF per-share rate, per-transaction cap, and member firm regulatory fees - American Depositary Receipts (ADRs): Investor BulletinNew window
SEC Investor.gov · Verify 2026-10-20
ADR, ratio to underlying shares, fees, exchange rates, and proxy voting
This is educational material for observation and information comprehension. Hypothetical examples do not represent actual stocks or performance and do not provide buy or sell recommendations.