DEFINITION of 'SEC Fee'

A nominal fee that was created by the Securities Exchange Act of 1934 to be an additional transaction cost attached to the selling of exchange-listed equities. This fee is usually listed as a separate fee, independent of any associated brokerage commissions or fees.

Up until 2007, the fee is 1% of one three-hundredth of the dollar value of the equities sold. After 2007, the fee will be 1% of one eight-hundredth of the dollar value of the equities sold.

BREAKING DOWN 'SEC Fee'

The proceeds of the SEC fee are collected from the brokerage firms and are eventually returned to the U.S. Treasury. This fee provides the necessary capital for the government to pay for the costs involved in the SEC's regulation of equity dealers and the equities market.

Note that this fund only applies to the selling of most classes of equities and equity-related options. Debt instruments, such as bonds, are not charged this fee.

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