Does Schwab Limit Price Improvement for Very Heavy Trading?

Big advantage of pfof to the public is that you get executions to 4 decimal places. Regular market makers are good to only 2 places.

 

Just another way that internalizers have an unfair advantage over everyone else. It's not like regular MMs don't want to give you more than 2, it's because they can't.

 

I have 2 questions about price improvement. (1) If I enter a marketable buy order (a Market Order or Limit order targeting above the ask-just in case the stock moves fast) and it takes more than a second to get an execution and that ask is now $0.05 higher than it was when I hit "send", and the price improvement was $0.0001 better than the ask, was that better than buying on the ask when I hit send and paying the fee to NASDAQ or ARCA or NYSE? (2) if I'm the customer selling on the ask at that moment in time, and the equity MM steps in front of me by $0.0001 so I can't sell anything, how does that affect me when I want to get out?

 

1. Are you implying that internalizers intentionally delay execution to profit themselves? This would be very illegal(*). Brokers that sell flow may have slower executions on average for various reasons, but brokers that direct route can be just as slow or even slower. If execution speed matters to you, you need to measure it, you can't just assume that no internalization <-> fast execution.
2. Clearly, the existence of internalization massively disadvantages anyone who places passive limit orders. Your chances of adverse selection will go up, and your profits will go down accordingly. You might even have to hit the bid to get out.

(*) EDIT: That is not to say that it never happens. https://www.bloomberg.com/news/arti...s-fined-by-finra-for-trading-ahead-of-clients

 

what was your price improvement before vs now? do you have a precise number or is it just gut feeling?

 

This point is very relevant to the discussion I started in the lightspeed finra violation thread where people bring up IB never re-directing your order, whereas lightspeed does. (Sorry for the tangent OP).

Can I ask if you have any insight as to why direct routes could be slower execution?

I've been on a hunt trying to find recommendations for the absolute fastest executions with decent fills and lightspeed's fine print about ignoring your direction to do payment for order flow instead has me concerned. I believe Centerpoint has it too, but IB does not apparently (with non-smart route orders) - and yet people have suggested that IB's smart router is slow.

 

The clients that switch from the "free" routes to us are telling us they are delayed using those routes. The calls we get every day are telling us this. With regard to "delays" being illegal or against SEC/FINRA rules, I'm not aware of a rule that says best execution is the fastest execution. https://www.lightspeed.com/testimonials/. Our clients switch to us for fast order entry and fast execution. Try it, you will see the difference. https://www.lightspeed.com/10k-2021/.

 

What is Lightspeed's average price improvement vs NBBO?

 

We do not offer price improvement.

 

I don't understand. This is comparing your executions against NBBO. You're saying there is statistically never against price improvement against lit prices in the order book ever?