I use the Alpaca API to trade penny stocks. Just got an email:
We have reviewed the activity in your account. The orders continue to be executed on the opening and closing auctions. Starting on Tuesday we will route your orders to a non retail route and you will be charged a fee of 40 mils per share executed. To calculate the daily fee you would take your total shares traded for the day and multiple by .0040.
I’m kinda pissed at this! This isn’t mentioned anywhere in public that I could see.
I understand PFOF and how Alpaca makes money, but Pricing and fees says: “For U.S. equity trades there are no commissions charged and all clearing fees are paid by Alpaca Securities LLC to our clearing firm Velox Clearing.”
And then you start charging me commissions because you don’t like my order type!
Everything I did was by the book and I spent lots of hours coding to Alpaca’s buggy C# API and now you want to start charging me? Market-on-open is a valid order type in your API. If you have limits on it, SAY SO UP FRONT.
Anyone from Alpaca: how does this not violate FTC’s “Truth In Advertising” act that says representations of products/services must be “truthful, not misleading”?
Well, I think in particular for lower prices shares, and in particular penny stocks the commission free can be the best option (even if not free).
But most importantly now, I still don’t understand the pricing model since the website still claims commission free. Are some customers charged differently ?
Yes, that’s the problem. I had a call with 4 people from Alpaca and they told me auctions are “non-retail” so that makes me a professional trader and hence not eligible for commission-free trading. There is absolutely no mention of “retail-only” on the website; I told them to change the language and they said “Ok but it won’t be anytime soon.”
They do have a clause somewhere saying (and this is from the top of my head) that if you happen to exhibit a certain trading pattern (I believe it was based on the number of orders or total transaction amount: if you exceed a loosely specified [if at all] limit on either), you can be classified as non-retail trader and trades will incur additional fees. Call yourself lucky that they notified you in advance. I specifically recall the paragraph saying that they can just change that at will from one trade to the next, and only notify you at some later point. Unfortunately, I can’t find the document in question right now Of course it’s unbelievable that something like this is even legal, but, well…
@hein123 I have anywhere from a few dozen to a few hundred executed trades per day. However be aware that this issue isn’t about how many trades per se, but where they are happening. Mine are in the opening/closing auctions which is where Alpaca had the problems - they can’t sell those for PFOF.
There is a business account offer (Alpaca Business Trading Accounts - Commission-Free API First Stock Brokerage) that advertises commission free but I am not able to access the “Commissions Disclosure” on that page.
The “Commissions Disclosure” from the main page now states: " Alpaca reserves the right to charge additional fees if it is determined that orders flow is non-retail in nature."
However, they do offer a Broker API: “a suite of APIs that enables you to open customer accounts, offer commission-free trading, …” from (Alpaca Broker API - Launch your own commission-free trading app). This to me is pretty much the definition of non-retail. So I would like to understand better the meaning of non-retail.
The same thing happened to me! They were extremely opaque when I pressed for more information. I figured if they’re going to charge me fees, they should also pass on any rebates for adding liquidity. Initially they said that they’d use any rebates to offset the 40 mils fee, so the real rate may be less than 40 mils. Later, they walked that back and said Alpaca pockets the rebates in addition to the fees! The irony of their unprofessional behavior while trying to label me a professional trader was not lost on me.
I decided to migrate to Interactive Brokers, as their fee is literally half at the volume that I trade, and they pass the entirety of the 20mil NASDAQ/NYSE/AMEX rebate back to you for providing liquidity. If Alpaca tries to charge you fees, know that you can do MUCH better than their $0.004/share.
Same thing happened to me. They start to classify my orders as non-retail when I just began to make profits after losing a huge amount of money in the past two years. 40 mils per share are charged for both buy and sell - not a small amount, but what’s more threatening to me is that non-retail orders are less protected than retail ones in the market. It’s sad that they start to curb me before I could make back just a fraction of my past losses.
Bitter taste in my mouth, I do understand that it is totally appropriate to charge commissions and conduct their business. What I find inappropriate is that their criteria for determining retail vs non-retail order flows are so opaque that they can easily switch your status at their will. Is this fair? Fortunately we also have decent alternative brokers to switch to.