When selling a brokerage-free ETF there are two common scenarios:

  1. If you hold your brokerage-free ETF for longer than a year - you will only be charged the sell-side brokerage, whilst you will not be charged for your original buy-side brokerage.

  2. If you hold your brokerage-free ETF for less than a year - you will be charged both the sell-side and original buy-side brokerages.

Although the above are common simple scenarios, when having invested in the same ETF multiple times, you might be interested in knowing when you will be charged the original buy-side brokerage. For this, the following rules are followed:

  • We always calculate buy-side brokerage based on the quantity of the ETFs you hold. Only once you sell more units than a specific buy order will you begin being charged for the next buy order.

  • We always calculate from the date furthest from the present, including ETF units you've held longer than a year.

Think of it as a series of buckets of water that you've accumulated over 3 years.

  • Each bucket represents a purchase of an unspecified quantity of ETFs. Over the last 3 years, there have been 4 investments made.

  • When you sell, you begin emptying the buckets from furthest away in time. In this instance, emptying would begin from bucket 1, ie. left to right.

  • Only once you sell more quantity than a bucket contains, do you move to emptying the next bucket.

  • The only time you will be charged the original buy-side brokerage for a bucket is if you begin emptying a bucket that is within the preceding 12 months. In this instance, only once you begin to empty bucket 4 will you be charged the original buy-side brokerage for bucket 4.

  • You will be charged upon beginning to empty a bucket, not when it is completely empty.

Please note that all sell orders still incur normal brokerage fees. The above only shows when the charge of the original buy-side brokerage occurs for a given investment.

For more information on brokerage-free ETFs, check out this blog post detailing the ins and outs of how and why they exist, and who is involved in providing this benefit.

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