I got a Schwab disclaimer in the mail today. I read the fine print on this stuff. I'll share a link on their order execution. I think they worked on these pages for months (years)...So customer service doesn't have to spend hours on the phone with people. I'm also sure legal went over this with a fine toothed comb. https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=&cad=rja&uact=8&ved=2ahUKEwi0kqSE3o3uAhVFR60KHXUQA5gQFjAAegQIARAC&url=https://www.schwab.com/execution-quality&usg=AOvVaw2mk4Iypw6wiEWe-Cpx8pli In the little flyer nothing much stood out to me except this one phrase. Could you tell me what this means?? Schwab considers a number of factors in evaluating execution quality among markets and firm, 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 system, liquidity and automatic execution guarantees, the likelihood of executions when limit orders become marketable and service levels and the cost of executing orders at a particular market or firm. What bugged me is that last phrase "the likelihood of executions when limit orders become marketable and service levels and the cost of executing orders at a particular market or firm." Does that seem arbitrary and not working toward my advantage?? I like how the above is a total run on sentence. The website is fine...But in the fine print I find "their" profit!!
On the website...At the bottom in the fine print. Non-marketable limit orders that become marketable during the routing process may be re-routed to one of our liquidity providers.
It means if you are trading too big or too illiquid of products, they can reroute your orders directly to the market makers/liquidity providers so you can execute the trade utilizing dark liquidity in order to prevent disrupting the market.
It is boiler plate language which likely nearly every broker who gets paid for order flow uses. My interpretation is they will reroute to their liquidity providers to execute the order if a limit order becomes marketable during the routing process. The reason being that the liquidity providers are paying schwab for order flow. Therefore the cost for schwab is lessened caveat: I could be off base with my comment. Is payment for order flow still a controversial issue?
It is not for the average day trader. But for the average investor, they may not understand the process...
%% Good points. Some average + above average investors/traders also understand no one wants to work for nothing. This remark includes, but is not limited to, payment for order flow.[NOT a prediction, not a broker.]