CME fees and rebates are easy to understand but can someone explain CBOE fees and their rebates if any? I am trying to figure out what is the actual cost for brokers and if they are adding any mark up before they pass through to retail clients? Also if brokers are getting any rebates ? Fidelity is charging flat free for spx trading - 0.65$ - and to my understanding that is the actual fees CBOE charge them - 0.45$ +0.20$ surcharge - - so they are not making money or they are making money in rebates give by CBOE?
The CBOE exchange fees for the SPX depend on the price of option and whether it is SPX or SPXW. I believe the minimum is a total of .24 for cheap SPXW options up to a high of .66 (.45 plus .21 surcharge) for more expensive SPX options. So the charge isn't necessarily the maximum charge you mentioned As you say Fidelity doesn't charge extra for trading SPX options, they charge the same as any other options. They are one of the few (if only) brokers that I know of that doesn't pass these exchange fees on to the customer.
I thought Etrade did, but no direct knowledge. SPX options are not nearly as valuable for PFOF, since they are single listed and all trades are done on the CBOE. I have heard various things that brokers receive zero to some reduced amount from PFOF for SPX options.
Exchange fees are going to always be paid by someone in the equation - what you are sending is a "preferenced order" and in the index complex at CBOE those are worth their weight in gold. Doesn't need to go on the form 605/605 and 607 is as vague as possible because it's not hard payment. If I'm a size MM and I could get preferencing from 3 or 4 brokers it's worth a fortune, especially if there is only one destination. You should discuss preferencing with your broker if you want to understand more. Think of Etrade and Morgan Stanley. Essentially internalization and no checks get written.
Fidelity does pass exchange fees- they charge 0.65$ so that is the exchange fees - you can say they dont charge commission or per contract fees but they do pass on exchange fees to customers. You are right for some cheaper options and spxw - CBOE charge is less than their max which is 0.65$ but most brokers charge flat fee of 0.65$ - even fidelity ...so they can make some money their. - for example you said 0.24 for spxw but we pay 0.65 so ...
I don't think that is an accurate representation. Fidelity charges .65 a contract for any option. The CBOE charges additional exchange fees for SPX options (in various amounts depending on the price of the option). Fidelity does not pass these extra exchange fees on to the customer. They will always be .65 on an option, exchange fee or not. And the max exchange fee for the SPX is currently .66, not .65.