Trade Quality & Execution

When you place an order, we work to get you the best execution possible. Scottrade takes great pride in seeking best execution for its clients, and we recognize the importance of delivering quick and efficient executions. That’s why we thoroughly review key execution metrics including price improvement percentage, execution price and execution speed on a daily basis.


We maintain a healthy dialogue with each of our market centers, blending concise analysis with effective communication in an effort to drive competition that benefits our clients in the form of more competitive execution prices versus the National Best Bid/Offer (NBBO). This focus on driving competition yields millions of dollars in price improvement each year – real savings that are passed on to our clients. Learn more about Scottrade’s performance in key execution quality metrics and our tools for monitoring execution quality below.


Learn more about the market centers to which Scottrade routes its order flow:

 

 

 

                                  

Life Cycle of an Order

Scottrade Best-Execution Index 

  A Cornerstone of Execution Quality

Scottrade uses a patented1, proprietary algorithm, the Scottrade Best-Execution Index (SBI), which helps us identify potentially underperforming market centers in both S&P 500 and NASDAQ 100 securities. The algorithm incorporates factors such as:
 

  • Execution Speed
  • Price Improvement Percentage/Price Improvement Cents
  • At-the-Quote Percentage
  • Outside the Quote Percentage/Outside Quote Cents
  • Effective Spread
     
Scottrade Best-Execution Index

 

Scottrade does not guarantee any trade’s execution time or price. However, if the SBI process identifies an under-performing market center, Scottrade will seek opportunities to route affected order flow to a better-performing market center, attempting to offer you the best execution possible.
 

1The Scottrade Best-Execution Index (SBI) is a patented algorithm (Patent No. 7,698,200) for evaluating execution quality in NASDAQ 100 and S&P 500 stocks. The SBI is utilized by Scottrade to compare the execution quality of market centers utilized by Scottrade to other market centers.

Information is based on analysis from VistaOne Solutions. VistaOne Solutions is not affiliated with Scottrade. The information does not include pre-market or after-hours orders or orders received during locked or crossed markets. It does include orders received during fast market conditions. Scottrade updates the information on a monthly basis.

You will always receive the price at which your order was executed at the trading center even though the execution report that Scottrade receives may be delayed (or “late”) from the trading center. A “late report” refers to when Scottrade does not receive a timely execution report from a trading center.

Scottrade monitors execution quality in an effort to seek best execution* for its customers. Scottrade uses various monitoring methods. These methods include a daily order-by-order exception report analysis. They also include a post trade date regular and rigorous review of execution quality. We perform this regular and rigorous review by analyzing statistics from VistaOne Solutions and by reviewing the output of our patented algorithm, the Scottrade Best-Execution Index or SBI™.

*As defined in FINRA Rule 5310

Savings Per Order

Savings per order represents real cost savings experienced by Scottrade clients. This metric captures both the frequency and amount of price improvement received on an order basis. It is calculated using the following formula:
 

Savings Per Order formula



 

Execution quality statistics are generated from VistaOne Regulatory Services, a third-party data provider. Statistics are based on trade activity in two symbol groups: S&P 500 securities and other exchange-listed securities. The above data reflects performance in the respective symbol groups/share sizes during the most recent 6-month period. Statistics exclude trades entered outside of regular trading hours, orders received during locked or crossed markets and trades that, in Scottrade's discretion, occur in extreme market conditions or other unusual circumstances. Market volatility, volume and system availability may impact trade execution quality. The data displayed on this page is updated on a monthly basis.

Scottrade monitors execution quality in an effort to seek best execution* for its customers. Scottrade analyzes key execution quality metrics across various bucket sizes and time horizons when reviewing destination performance. Destinations are compared against one another as well as against Industry benchmarks. Scottrade also employs a daily order-by-order exception analysis in addition to utilizing the firm's patented algorith, the Scottrade Best-Execution Index or SBI, in an effort to ensure a consistent, quality execution experience for its clients.

*As defined by FINRA Rule 5310 

Price Improvement Percentage

We strive to deliver executions at prices better than the National Best Bid/Offer (NBBO). This effort is captured by our performance in price improvement percentage – a measure of the percentage of shares executed at a price better than the NBBO. Price improvement reflects real savings passed on to you and underscores our commitment to providing a consistent quality execution experience.

 

Execution quality statistics are generated from VistaOne Regulatory Services, a third-party data provider. Statistics are based on trade activity in two symbol groups: S&P 500 securities and other exchange-listed securities. The above data reflects performance in the respective symbol groups/share sizes during the most recent 6-month period. Statistics exclude trades entered outside of regular trading hours, orders received during locked or crossed markets and trades that, in Scottrade's discretion, occur in extreme market conditions or other unusual circumstances. Market volatility, volume and system availability may impact trade execution quality. The data displayed on this page is updated on a monthly basis.

Scottrade monitors execution quality in an effort to seek best execution* for its customers. Scottrade analyzes key execution quality metrics across various bucket sizes and time horizons when reviewing destination performance. Destinations are compared against one another as well as against Industry benchmarks. Scottrade also employs a daily order-by-order exception analysis in addition to utilizing the firm's patented algorith, the Scottrade Best-Execution Index or SBI, in an effort to ensure a consistent, quality execution experience for its clients.

*As defined by FINRA Rule 5310 

Execution Price (“At-or-Better Percentage”)

While many Scottrade clients enjoy some form of price improvement on their trades, we closely monitor each trade to ensure you do not receive an execution price that represents a disadvantage versus the prevailing market. Scottrade validates this through at-or-better percentage – equal to the percentage of shares executed at a price better than the NBBO plus the percentage of shares executed at the NBBO.
 

Execution quality statistics are generated from VistaOne Regulatory Services, a third-party data provider. Statistics are based on trade activity in two symbol groups: S&P 500 securities and other exchange-listed securities. The above data reflects performance in the respective symbol groups/share sizes during the most recent 6-month period. Statistics exclude trades entered outside of regular trading hours, orders received during locked or crossed markets and trades that, in Scottrade's discretion, occur in extreme market conditions or other unusual circumstances. Market volatility, volume and system availability may impact trade execution quality. The data displayed on this page is updated on a monthly basis.

Scottrade monitors execution quality in an effort to seek best execution* for its customers. Scottrade analyzes key execution quality metrics across various bucket sizes and time horizons when reviewing destination performance. Destinations are compared against one another as well as against Industry benchmarks. Scottrade also employs a daily order-by-order exception analysis in addition to utilizing the firm's patented algorithm, the Scottrade Best-Execution Index or SBI, in an effort to ensure a consistent, quality execution experience for its clients.

*As defined by FINRA Rule 5310

Make Your Trade in Milliseconds

Trade execution speed, or how quickly an order is filled, is an important part of overall execution quality. We regularly review and assess market center performance to optimize trade speed and strongly compete against industry averages – helping to ensure your orders are executed at the fastest speed. On average, Scottrade client orders are executed in milliseconds.
 

  Optimized for Fast Trading

We’re consistently working to help you get an edge on the market. It’s why we review and carefully test our Web performance against leading information technology benchmarks to confirm our website is optimized for fast trading. As a result, we have earned Compuware’s 2013 Best of the Web Gold Award, making us an overall leader in our industry when it comes to generating order transactions.

 

Trade Order Speed


 

What Makes Scottrade’s Site the Best of the Web?

Best of the Web award is based on Compuware Performance Benchmarks which competitively ranks the performance of industry leaders’ websites. The Benchmarks measure:

  • Response time - an end-to-end measure that includes the time elapsed from the initial page download until the completion of a transaction order and a client’s subsequent log off. It assumes the user is actively trying to finish this task quickly, so it does not factor in any latency or time spent off-task on the client’s end.

  • Availability - a measure of the number of successful tests Compuware completes without errors.

  • Consistency - the measurements against standard deviations.


For the Generate Order Transaction, tests are run at regular 30- or 60-minute intervals throughout each business day. Compuware’s methodology includes page performance and the key business process. For Scottrade, that process is a trade transaction.

Source Data: Compuware Corporation (www.compuware.com)
Compuware’s Brokerage Generate Order Transaction measures the time it takes to perform / simulate a trade. It calculates the time it takes a customer to access the home page, login to an account, access the trade page and then enter a test order for one share of stock, toggle to the preview page to display the real-time order, toggle back to the trade page, where said order is canceled, and finally – log out – which is the last phase tested.

Trade execution speed is measured from the time Scottrade routes your order to the marketplace until the time your order is executed at the trading center. Trade execution speed does not include the time it takes for the order to be reported back to Scottrade and you.

Trade execution statistics are provided by VistaOne Solutions, which is not affiliated with Scottrade. Statistics are based on trades in NASDAQ 100 and S&P 500 stocks for market orders of 100 to 499 shares in size. Statistics exclude trades outside of the regular trading session, orders received during locked or crossed markets and trades that, in Scottrade's discretion, occur in extreme market conditions or other unusual circumstances. Market volatility, volume, and system availability may impact trade execution quality. This information is updated monthly with the average trade execution speed calculated using a 12 month rolling average. You will always receive the price at which your order was executed at the trading center even though the execution report that Scottrade receives may be delayed (or “late”) from the trading center. A “late report” refers to when a timely execution is not received from a trading center.

Scottrade monitors execution quality in an effort to seek best execution* for its customers. Scottrade uses various monitoring methods. These methods include a daily order-by-order exception report analysis. They also include a post trade date regular and rigorous review of execution quality. We perform this regular and rigorous review by analyzing statistics from VistaOne Solutions and by reviewing the output of our patented algorithm, the Scottrade Best-Execution Index or SBI™.

* defined in SEC rule 605

Enhanced Liquidity

We provide you with a more seamless execution experience by routing your orders to market centers capable of providing enhanced liquidity. When you place an order that is larger than the publicly displayed size, our market centers’ ability to provide enhanced liquidity serves to minimize the order’s potential price impact to the market.

To better understand enhanced liquidity, consider the following example:

Enhanced Liquidity

Client A places a 500-share market buy order in symbol XYZ when the displayed size on the offer is only 200 shares. A market center’s ability to efficiently execute the remaining 300 shares of that order at the prevailing offer or better would be an effective gauge of that market center’s ability to provide enhanced liquidity. If this order had not been routed to a market center capable of providing enhanced liquidity, you could potentially receive two separate transactions: 200 shares priced at the offer ($20.04) with the remaining 300 shares filled at $20.05.


Our destination’s ability to provide enhanced liquidity to your order flow in these situations is a tangible benefit to your execution experience.

 

 

  Quarterly Order Routing Disclosure 

Scottrade supports efforts to provide and promote transparency in the marketplace. We believe enhanced, meaningful transparency can serve as a catalyst for driving competition amongst industry participants to the ultimate benefit of the investing public. We recognize and embrace the opportunity to educate our clients on why this data is relevant and how the data can be used to empower a client’s decision-making process. Scottrade knows that a confident, educated investing public will only serve to benefit the current marketplace.

  This report details Scottrade’s order routing decisions across four symbol groups:

  • New York Stock Exchange Listed (Tape A Securities)
  • NASDAQ Listed (Tape C Securities)
  • Regional Exchanges (Tape B Securities)
  • Exchange Listed Options
     

Pursuant to its obligations under the U.S. Securities and Exchange Commission’s disclosure rule, SEC Rule 606, Scottrade makes its order routing practices publicly available on a quarterly basis. This report identifies the venues to which Scottrade sent client order flow during the applicable period in addition to detailing any material relationships Scottrade maintains with those execution venues.

To review Scottrade’s Order Routing Information, compiled by quarter, please click the link below.
View SEC Rule 606 Report

Also, please note that the SEC Rule 606 Report linked to above does not apply to OptionsFirst. For OptionsFirst statistics and other smart order routing information, please click on the link below.
View OptionsFirst Disclosures