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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. 

Schwab receives remuneration, such as liquidity or order flow rebates, from market venues to which orders are routed, and also pays fees for execution of certain orders. 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 your orders for up to a six-month period is also available.

Report on Routing Customer Orders for Quarter Ending September 30, 2018

The report is divided into four sections:

Securities Listed on the New York Stock Exchange ("NYSE") and Reported as a Network A Eligible Security
Securities Listed on the NYSE Amex or Regional Exchanges and Reported as a Network B Eligible Security
Securities Listed on the NASDAQ Stock Market ("NASDAQ")
Exchange-Listed Options

For each section, this report identifies the principal venues to which Schwab routes non-directed orders, sets forth the percentage of various types of orders routed to each of the venues, and discusses the material aspects of any arrangements Schwab may have with these venues

.

I. Securities Listed on the NYSE/Network A Eligible Securities

Summary Statistics NYSE
Non-directed orders as percentage (%) of total customer orders: 99.6%
1. Market Orders as % of total non-directed orders 55.4%
2. Limit Orders as % of total non-directed orders 39.6%
3. Other Orders as % of total non-directed orders 4.9%
Venues Receiving Significant % of Total Non-Directed Orders
Venues % of Non-Directed Order Flow Received  Order Composition as a % of Total Non-Directed Order Type
NON DIRECT MARKET ORDERS LIMIT ORDERS OTHER ORDERS
Citadel Execution Services 28.5% 29.9% 27.4% 22.1%
VIRTU 27.3% 26.5% 26.7% 41.4%
G1X 20.3% 20.8% 19.6% 19.2%
UBS Securities LLC 16.8% 16.8% 17.4% 12.9%
Two Sigma 4.2% 5.9% 1.9% 4.0%
Bats EDGX 1.6% 0.0% 4.0% 0.0%
NASDAQ 0.7% 0.0% 1.7% 0.0%

Arrangements with Market Venues

II. Securities Listed on the NYSE ARCA or Regional Exchanges/Network B Eligible Securities

Summary Statistics NYSE Amex/Regionals
Non-directed orders as percentage (%) of total customer orders: 99.9%
1. Market Orders as % of total non-directed orders 66.1%
2. Limit Orders as % of total non-directed orders 29.5%
3. Other Orders as % of total non-directed orders 4.4%
Venues Receiving Significant % of Total Non-Directed Orders
Venues % of Non-Directed Order Flow Received  Order Composition as a % of Total Non-Directed Order Type
NON DIRECT MARKET ORDERS LIMIT ORDERS OTHER ORDERS
Citadel Execution Services 27.0% 27.4% 27.3%  18.6%
VIRTU 25.9% 25.9% 26.9%  18.7%
G1X 21.8% 22.9% 20.0% 16.5%
UBS Securities LLC 18.3% 17.0% 17.5%  41.6%
Two Sigma 5.1% 6.5% 2.1% 3.4%
Bats EDGX 1.1% 0.0% 3.8% 0.0%
NASDAQ 0.5% 0.0% 1.7% 0.0%

Arrangements with Market Venues

III. Securities Listed on the NASDAQ Stock Market

Summary Statistics NASDAQ
Non-directed orders as percentage (%) of total customer orders: 99.8%
1. Market Orders as % of total non-directed orders 48.6%
2. Limit Orders as % of total non-directed orders 46.2%
3. Other Orders as % of total non-directed orders 5.2%
Venues Receiving Significant % of Total Non-Directed Orders
Venues % of Non-Directed Order Flow Received  Order Composition as a % of Total Non-Directed Order Type
NON DIRECT MARKET ORDERS LIMIT ORDERS OTHER ORDERS
Citadel Execution Services 27.6% 28.6% 27.0% 24.3%
VIRTU 26.6% 25.7% 26.7% 33.1%
G1X 21.1% 22.3% 19.6% 21.7%
UBS Securities LLC 17.1% 16.8% 17.4% 16.1%
Two Sigma 4.2% 6.4% 1.9% 4.4%
Bats EDGX 2.0% 0.0% 4.4% 0.0%
NASDAQ 1.1% 0.0% 2.4% 0.0%

Arrangements with Market Venues

IV. Exchange-Listed Options

Summary Statistics Listed Options
Non-directed orders as percentage (%) of total customer orders: 100%
1. Market Orders as % of total non-directed orders 12.7%
2. Limit Orders as % of total non-directed orders 85.8%
3. Other Orders as % of total non-directed orders 1.5%
Venues Receiving Significant % of Total Non-Directed Orders
Venues % of Non-Directed Order Flow Received  Order Composition as a % of Total Non-Directed Order Type
NON DIRECT MARKET ORDERS LIMIT ORDERS OTHER ORDERS
Chicago Board Options Exchange 19.8% 28.3% 18.0% 51.8%
NASDAQ OMX PHLX 14.5%  25.0%  12.8% 25.3%
International Securities Exchange 13.4%  4.5% 14.9% 4.2%
Nasdaq Option Market 12.1%  1.3% 13.9% 1.3%
BATS Options Exchange 11.8%  1.5% 13.5% 0.9%
GMNI 8.6% 2.0% 9.7% 2.3%
MIAX 5.1% 15.1% 3.6% 5.9%
NYSE Arca 4.1%  1.4%  4.6%  1.2%
NYSE-Amex Options 3.3%  3.5% 3.3%  1.8%
Boston Options Exchange 3.1% 12.6% 1.7% 1.3%
Pearl 2.7% 1.5% 2.9% 1.8%
BATS EDGX 0.9% 1.8% 0.8% 0.8%
C2 Options Exchange 0.3% 0.6% 0.3% 0.7%
NSDQ OMX BX 0.2% 0.7% 0.1% 0.7%
Mercury 0.1% 0.2% 0.1% 0.1%

Arrangements with Market Venues