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Trade Execution Quality & Routing

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Schwab’s Execution Quality Advantage

When you place trades with Schwab, you’re placing your trust in us. That’s why we’re committed to providing fast, quality executions with the highest level of transparency related to our performance, process, and practices.

We work hard to ensure your equity orders are routed to destinations that have provided high-quality executions over time. We seek out top-performing securities exchanges and liquidity providers and rigorously evaluate execution quality. It’s all part of our commitment to putting your interests first and core to Schwab’s Regulation NMS Equity Order Routing.

The Value of Schwab’s Order Execution Quality

Obtaining high-quality executions on your orders, whether you’re buying or selling shares, may result in real savings.1

For example, here’s how we improved executions for market orders of 500-1,999 shares in S&P 500® stocks during the previous quarter.

S&P 500 Stocks
Order Size Range (Shares) Average Order Size (Shares) Shares Executed at Current Market Quote or Better (%) Price Improvement (%) Average Savings Per Order ($) Average Execution Speed (Seconds)
1 - 99 31 99.6% 98.4% $0.62 0.11
100 - 499 193 99.5% 97.7% $3.09 0.11
500 - 1,999 840 98.6% 96.5% $10.50 0.11
2,000 - 4,999 2,748 96.5% 93.8% $19.51 0.11
5,000 - 9,999 6,817 92.9% 88.4% $15.68 0.11

A greater level of transparency

Transparency and honesty are hallmarks of the way we do business. That’s why we exceed basic industry disclosure requirements (learn more about Reg NMS Rules 605 and 606) and have chosen to participate in the Financial Information Forum Rule 605/606 Retail Execution Quality Working Group, whose goal is to provide retail investors with more visibility into execution quality. Participants voluntarily publish standardized statistics such as the ones above, which measure the quality of trade executions for market orders in exchange-listed (Regulation NMS3) equity securities. We believe this information is useful when considering the job your broker-dealer is doing in providing quality executions.4

See the full set of our FIF retail execution quality statistics along with frequently asked questions about these measures.

Learn more about how price improvement and the National Best Bid and Offer work.

See how Schwab’s execution compares to others in the industry.

Our advanced order routing process seeks to obtain high-quality execution results.

See How It Works

How we evaluate execution quality

Schwab rigorously and regularly monitors the quality of executions obtained from securities exchanges and liquidity providers to ensure that orders are routed to destinations that have provided high-quality executions over time.

Considering that no one sole metric defines execution quality, Schwab reviews a number of factors when making our evaluation, such as:

  • Execution price, speed, and accuracy
  • Market depth, order size, and trading characteristics of the security
  • Liquidity, automatic execution guarantees, and opportunities for price improvement
  • Service levels and the cost of executing orders

The execution quality statistics we review are provided by S3 Matching Technologies, a third party that conducts an independent analysis of our client executions. These results are used to evaluate the execution performance of securities exchanges and liquidity providers based upon similar order characteristics.

  • Rated #1 site performance by Investor's Business Daily, 2017

  • Rated #1 trade reliability by Investor's Business Daily, 2017

  • Rated “Best in Class” for order execution by StockBrokers.com, 2017

Why put your trust in trading with Schwab?

Schwab is committed to putting your interests first, and to transparency in our order routing practices, and execution quality performance. Our order routing process seeks to deliver high-quality executions through access to the best performing liquidity providers and exchanges.

See how order routing works

Definitions

  • An Alternative Trading System (ATS) is an execution platform that brings together buyers and sellers of securities, similar to how orders are matched on an exchange. The system operator must be a licensed broker-dealer registered under SEC Rule ATS and must comply with various conduct and reporting requirements.
  • Liquidity providers are broker-dealers who execute orders based on their assessment of how to obtain the best executions. They may act as market makers and execute orders against their own account or route orders directly to other execution venues such as Alternate Trading Systems or securities exchanges.
  • A market maker commits its own capital and stands prepared to buy and sell securities during the trading day at quoted prices.
  • Price improvement occurs when an order is executed at a price lower than the quoted offer when purchasing, or a price higher than the quoted bid when selling. The amount of price improvement per share may be less than the minimum quotation price increment (typically, one cent).
  • A securities exchange is an entity that has registered with the SEC under the Securities Exchange Act of 1934 and facilitates the buying and selling of securities among market participants.
  1. Actual results may vary; data cited here are averages.
  2. Execution speed is measured from the time Schwab sends an order to a market center until the time an execution is completed by the receiving market center. This is typically less than one second and excludes pre-trade review and the time that it takes for the order execution to be reported back to Schwab and posted to the order’s status.
  3. See SEC Regulation NMS for more detail.
  4. A number of factors should be considered when evaluating this data, such as a firm’s client base, order flow mix, and business model.