Order routing
Where your trade goes matters. Here's a look at how orders are routed and how Schwab helps make the process more transparent.
A smarter path to better execution
Our approach to routing trade orders is simple: help clients get fast, high-quality fills. With Schwab's advanced order routing process, all non-directed trade orders are sent to external securities exchanges and liquidity providers committed to seeking improved execution outcomes for our clients—often by providing more liquidity than the market is quoting.1
The journey of your trade
From the moment you submit your order to the final fill, we actively advocate for your bottom line. Walk through the steps below to see how orders are generally routed for execution during regular market hours. This example applies to Regulation National Market System securities "held orders," which are market orders intended for prompt execution without discretion.2
Step 1: Order entry
Client (or a Schwab representative) enters an equity order, which can include an order that's "marketable" (priced for immediate execution) or "non-marketable" (not priced for immediate execution).
Step 2: Smart routing evaluation
Our advanced routing technology is designed to carefully consider the elements of order execution; employ sophisticated technology to route, monitor, and execute orders; and conduct regular and rigorous reviews of execution quality.
Step 3: Venue transmission
Marketable orders are generally sent to liquidity providers, direct securities exchanges, or alternative trading systems (ATSs).
Non-marketable orders are required to be displayed in the marketplace, so they are routed directly to a securities exchange or to a liquidity provider that will route it to an exchange for display.
Step 4: Order fill
Most marketable orders are executed instantly. Larger orders may be marked for special handling to potentially minimize market impact and obtain a better price.
Non-marketable orders are filled when the market reaches the limit price depending on market conditions and an order's priority in the market.
Important routing considerations
Special order types can play an important role in how your orders are handled and executed. Understanding how they work can help you make more informed trading decisions and better align execution with your goals. For more information about where we route orders, view the SEC Rule 606 report.
