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Trade Execution Quality & Routing


Schwab regularly monitors execution to ensure orders are routed to markets and firms that consistently provide high-quality executions for client orders.
Described below are several factors affecting how fast an order is filled in its entirety and at what price. While no one statistical measure can capture execution quality, we provide performance data on certain of these factors for some perspective on the trading process.

Effective/Quoted Ratio

The Effective-to-Quoted Spread Ratio is a measure of the execution price of an order relative to the quoted spread. Intended to reflect the roundtrip cost of the purchase and sale of a stock, the ratio is calculated as twice the difference between the execution price and the midpoint of the national best bid and offer (NBBO), divided by the NBBO. When a buy order is executed at a price equal to the offer price or a sell order executed at a price equal to the bid price the effective/quoted ratio is 100%. Lower ratios indicate executions better than the NBBO and greater cost savings (i.e., price improvement) to clients.

Effective/Quoted Ratio
Quarter Industry Average Schwab Industry Average Schwab
3Q2016 36.93% 18.37% 37.64% 24.91%
2Q2016 41.57% 23.39% 39.72% 31.39%
1Q2016 41.67% 25.41% 40.84% 33.89%
4Q2015 41.73% 33.51% 41.86% 39.77%