How can SogoTrade offer $1.50-$3.00 commissions?
Vertical Integration, Scale, and Efficiency
At SogoTrade, our goal has always been to provide the best value to our customers, combining friendly service, advanced trading technology, and fast executions with the lowest commission pricing. However, with commission fees as low as $1.50* - $3.00, when compared to other brokers that charge $9.99 or more for the same service, many wonder how SogoTrade is able to be profitable, let alone thrive. The key to SogoTrade’s growth, popularity, and success has always been our connection to parent company,
Genesis Securities, a leading broker/dealer specializing in meeting the needs of professional and institutional traders. Our firm is built from the ground up on the principles of vertical integration, scale, and efficiency, which, in combination, allows us to provide the highest levels of service at a much lower cost than many of our competitors. We can operate more efficiently than other firms, and we pride ourselves on being able to pass those savings to our customers through lower commissions. Here is a look at the structure of Genesis Securities and SogoTrade,
the company Forbes magazine calls “The Deepest Discount Broker.”
Genesis Securities: A Vertically Integrated Self-Clearing Broker
Genesis Securities is a vertically integrated self-clearing broker/dealer. This means that unlike many of our competitors who must outsource large portions of their business to other firms and pay hefty service or licensing fees, Genesis Securities operates all the major brokerage functions in-house. We are a data vendor, a technology developer, and a clearing firm all in one, a distinction that allows us to reduce costs, increase efficiency, and offer the most competitively priced services.
Economies of Scale
Doing everything in-house, from clearing to development, necessarily means higher overhead and higher costs; however, by integrating all the major brokerage functions, Genesis Securities and SogoTrade has achieved a level of success and scale that allows us to remain profitable even while offering some of the lowest commission in the industry. Genesis and SogoTrade frequently execute and clear over a hundred million shares a day, representing on average 2-4% of NASDAQ’s daily trading volume. Comparing 4Q 2007 trading volume figures, many are surprised to learn that in terms of tickets processed and shares transacted, Genesis and SogoTrade can match or exceed the trading volume of many of our better-known competitors. By spreading our higher fixed overhead over a large trading volume, by leveraging our economies of scale, and by constantly watching our costs, Genesis and SogoTrade have created a structure and a culture that allows us to offer some of the lowest commissions without sacrificing service, quality or profitability.
Online Brokerage Trading Volume Comparison
|
|
SogoTrade/Genesis Securities
|
Etrade
|
TD Ameritrade
|
OptionsXpress
|
ThinkorSwim
|
Charles Schwab
|
|
Online Equity Trade Commission
*1
|
Platinum Plan $1.50 ($10 monthly fee)
*2
Standard Plan $3.00 (no monthly fee)
|
$6.99-9.99
|
9.99
|
$9.95
|
9.99
|
$9.95-12.95
|
Average Daily Revenue Trades
(Q4 2007)
|
237,067
|
214,000
|
322,000
|
44,500
|
39,100
|
275,500
|
|
Average Daily Shares Traded(Q4 2007)
|
71,877,158
|
53,500,000
|
80,500,000
|
11,125,000
|
9,775,000
|
68,875,000
|
|
Average Daily Revenue Trade Multiple (Genesis/Other)
|
|
1.11
|
0.74
|
5.33
|
6.06
|
0.86
|
|
Average Daily Shares Traded Multiple (Genesis/Other)
|
|
1.34
|
0.89
|
6.46
|
7.35
|
1.04
|
*1
Prices for competitors were obtained on January 23rd, 2007 and are believed but are not guaranteed to be accurate. Some of the firms listed above may reduce or waive commissions or fees depending on account activity or total account value.
*2
* $1.50 per trade is based on the Premium package with $10.00 subscription
fee per month. $3.00 per trade for Standard package. See
Rates & Fees for complete details.
For SogoTrade trades above 5000 shares, the
commission cost is the regular commission plus $0.004 for each share above 5000
shares.
View
Examples.
For stocks priced less than $1, an additional
fee of 1/2 of 1% of principal value applies.
View Examples.
Sources