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Stories of Interest
- Sarah ten Siethoff is New Associate Director of SEC Investment Management Rulemaking Office
- Catherine Keating Appointed CEO of BNY Mellon Wealth Management
- Credit Suisse to Pay $47Mn to Resolve DOJ Asia Probe
- SEC Chair Clayton Goes 'Hat in Hand' Before Congress on 2019 Budget Request
- SEC's Opening Remarks to the Elder Justice Coordinating Council
- Massachusetts Jury Convicts CA Attorney of Securities Fraud
- Deutsche Bank Says 3 Senior Investment Bankers to Leave Firm
- World’s Biggest Hedge Fund Reportedly ‘Bearish On Financial Assets’
- SEC Fines Constant Contact, Popular Email Marketer, for Overstating Subscriber Numbers
- SocGen Agrees to Pay $1.3 Billion to End Libya, Libor Probes
- Cryptocurrency Exchange Bitfinex Briefly Halts Trading After Cyber Attack
- SEC Names Valerie Szczepanik Senior Advisor for Digital Assets and Innovation
- SEC Modernizes Delivery of Fund Reports, Seeks Public Feedback on Improving Fund Disclosure
- NYSE Says SEC Plan to Limit Exchange Rebates Would Hurt Investors
- Deutsche Bank faces another challenge with Fed stress test
- Former JPMorgan Broker Files racial discrimination suit against company
- $3.3Mn Winning Bid for Lunch with Warren Buffett
- Julie Erhardt is SEC's New Acting Chief Risk Officer
- Chyhe Becker is SEC's New Acting Chief Economist, Acting Director of Economic and Risk Analysis Division
- Getting a Handle on Virtual Currencies - FINRA
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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.”