TOS and order flow

Discussion in 'Options' started by cdowis, Jul 30, 2007.

  1. cdowis


    In another thread, order flow compensation was mentioned, so I sent an email to TOS asking about that.

    I received the following reply:


    TOS does receive payment for certain types of order flow. By industry
    standards our payment numbers as a percent of revenue are very minimal.
    In most cases our payment goes to offset cancel fees and index fess
    which we do not pass through to clients....

    Warm regards,


    Tom Sosnoff
  2. Pretty vague answer by them. rest assured that they get some compensation for order flow on pure retail accounts. Every exchange does it. Soft money deals fly right under the radar and they're is no benefit for them to tell you about them.
  3. cdowis


    My big concern is whether order flow compensation affects routing of orders.

    I received the following response, because I noticed that my orders are often routed to ISE.


    Not all with regards to the ISE (they actually charge the most for
    cancels and they are not a preferred destination for us). Our orders
    routed based on liquidity and price (nothing else!)
  4. If you're a retail account you get the NBBO no matter where they send the order so you're protected.
  5. cdowis


    Sorry, I am talking about option spreads.
  6. You'll still get the NBBO no matter if the bid is on one exchange and the offer on another
  7. cdowis


    Only if your broker has "smart routing", such as IB.

    A spread order goes to a single exchange and, as I understand, NBBO does not apply since it is a blended order.

    Do you honestly think an IC or fly is covered by NBBO????
  8. No one had mentioned spread orders in this thread yet.

    When you mentioned spreads... I commented NBBO because I thought you were talking about the bid offer spread... of course there is no NBBO on a spread order.
  9. Rest assured that there is payment for order flow on spreads either in the form of cash rebates to your broker or in terms of soft dollar deals.