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Stories of Interest
- North Korean caught secretly mining bitcoin rival
- IPO Timelines Cut by 80% After SEC's Private Filing Decision
- How the Carried Interest Break Survived the Tax Bill
- FINRA: The Neutral Corner
- Coinbasex Says Buying and Selling Temporarily Disabled Amid Price Rout
- Bitcoin plunges by more than a third in a single day
- Goldman Is Setting Up a Cryptocurrency Trading Desk
- Jefferies Lets Employees Choose When to Receive Their Bonuses
- UBS Told to Pay $903K After Losing Retaliation Verdict
- BEWARE: Long Island Iced Tea Shares Soar After Changing Name to Long Blockchain
- Gary Cohn’s Last Laugh: Cashing Out on Trump’s Tax Plan
- E*Trade Lets Customers Trade in CBOE Bitcoin Futures
- Swiss Find Serious Shortcomings at JPMorgan in 1MDB Case
- Washington-based Investment Adviser and His Business Partner Charged in Multi-Million Dollar Scheme
- FINRA Board of Governors Meeting
- Cryptocurrency Market Now Doing Same Daily Volume as the NYSE
- Jailed Barclays Trader Must Pay $400,000 From Libor Profits
- Trump Asks ‘How’s Your 401(k)?’ But Most Voters Don’t Have One
- A Bitcoin Hedge Fund’s Return: 25,004% (That Wasn’t a Typo)
- Madoff Victims Near Full Recovery of Principal With Payout
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NEWSLETTERS & ALERTS
Payment of Order Flow vs. Best Execution: Massachusetts Investigates
[Photo: William Galvin, Secretary of Commonwealth of Massachusetts]
by Howard Haykin
William Galvin, the top securities regulator for the Commonwealth of Massachusetts, announced that an investigation is underway into payment for order flow and best execution practices at 7 of the country’s top retail brokerage firms: (i) Fidelity Investment; (ii) Charles Schwab; (iii) Scottrade; (iv) TD Ameritrade; (v) E*Trade Financial; (vi) Edward D. Jones; and, (vii) Morgan Stanley.
The regulator sent letters to each firm requesting information about policies and practices for routing customer buy and sell orders to exchanges that offer payments for order flow, as well as procedures for ensuring best execution on trades. In his announcement, Mr. Galvin referred to a recent opinion piece in the NYTimes that said customers don't get the best price when brokers choose exchanges for the rebates they offer.
"My office is looking into the veracity of these assertions and whether the brokers are meeting their best execution obligation to their customers. If financial rebates or kickbacks create a conflict that results in less than the best deal for the investors, this practice must stop."
According to recent regulatory filings:
- Schwab, sent 29% of customer orders to KCG, for which it received on average less than $.0009 a share; it also sent 27% to Citadel in a similar arrangement.
- Fidelity sent 34% of its orders to Citadel, and 32% to KCG.
- E*Trade sent 41% of its orders to G1, a former affiliate that pays on average $.0001 a shar; it also sends orders to Citadel, BATS, KCG and Citi, among others.
FINRA conducted a comprehensive sweep of “Order Routing and Execution Quality of Customer Orders” in July 2014.
To access Lightspeed Trading’s payouts, click on “Routing Fees.”