Order Routing
In arranging for the execution of Non-Directed Orders for equities and listed options, Schwab seeks out industry-leading execution services and access to the best-performing markets. Schwab routes orders for execution to unaffiliated broker-dealers, who may act as market maker or manage execution of the orders in other market venues, and also routes orders directly to major exchanges.
Schwab considers a number of factors in evaluating execution quality among markets and firms, including execution price and opportunities for price improvement, market depth and order size, the trading characteristics of the security, speed and accuracy of executions, the availability of efficient and reliable order handling systems, liquidity and automatic execution guarantees, the likelihood of execution when limit orders become marketable, and service levels and the cost of executing orders at a particular market or firm. Price improvement occurs when an order is executed at a price more favorable than the displayed national best bid or offer. Schwab regularly monitors the execution quality obtained to ensure orders are routed to market venues that have provided high-quality executions over time.
Relationships with Market Venues
A principal benefit of executing orders through liquidity providers is the higher likelihood of price improvement such firms can provide, as well as enhanced liquidity or price protection for larger orders (i.e., executions at greater size than the limited size displayed at the current market quote). Schwab tracks execution data closely and maintains order routing arrangements with leading liquidity providers to maximize opportunities for price improvement and liquidity enhancement. On Schwab.com, clients can see the price improvement received on eligible equity orders by visiting the Order Status page. On thinkorswim® desktop, clients can customize their Order History view to include price improvement. To find out the percentage of orders that have received price improvement and the average improvement amounts over the last quarter, visit our Schwab Order Execution Advantage™ page.
As part of a common industry practice known as Payment for Order Flow, Schwab receives rebates from liquidity providers and certain exchanges based upon the order flow executed at each destination. Some orders require us to pay associated transaction costs, but most orders result in rebates. Net rebates received by Schwab are used to offset transaction and order processing or handling costs and help us maintain very low commission rates for our clients. Rebate rates are substantially similar among the various securities exchanges and liquidity providers, although they vary based upon order characteristics (i.e., marketable vs. non-marketable).
At Schwab we put our clients' interests first. Therefore, best execution for our clients always takes priority when determining where to route orders. Any eligible rebates from a particular market center are not a consideration in order routing decisions.
Quarterly information regarding the market venues to which we route orders and remuneration we receive is provided below. Information regarding the routing destination and time of execution of individual orders for up to a six-month period is also available.
Report on Routing Customer Orders for Quarter Ending June 30, 2026
Terms used in SEC 606 Reports
Covered securities
Covered securities are all Consolidated Tape Association ("CTA") eligible securities of both Network A and Network B, as well as all NASDAQ-listed securities. Includes: Exchange-listed equities, NASDAQ National Market equities, NASDAQ SmallCap equities, American Depositary Receipts (ADRs), and listed options. Exclusions: Equities quoted on the OTC Bulletin Board operated by the NASDAQ Stock Market, Inc.
Customer order
A customer order is an order to buy or sell a "covered security" that is not for the account of a broker-dealer. Large Order Exclusion: For reporting purposes, the rule excludes any order for a quantity of a security having a market value of at least $50,000 for options orders.
Directed order
A directed order is an order that a customer specifically instructed the broker or dealer to route to a particular venue for execution.
Other orders
Other orders include orders for which the customer requests special handling, including orders submitted with stop prices, all or none orders, fill or kill orders, orders that must be executed on a particular tick or bid (such as non-exempt short sale orders), not-held orders, and orders for other than regular settlement.
