How can I compare the order execution quality between two brokers if they don't follow the Financial Information Forum (FIF)'s template?
How can I compare the order execution quality between two brokers if they don't follow the Financial Information Forum (FIF)'s template?
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Franck Dernoncourt · External communityPost link
External question — Personal Finance Stack Exchange
Author: Franck Dernoncourt
Original post: https://money.stackexchange.com/questions/129912
License: CC BY-SA 4.0 — https://creativecommons.org/licenses/by-sa/4.0/
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As explained in
https://www.stockbrokers.com/guides/order-execution
(
mirror
), the information present in SEC Rule 606 reports don't allow to compare the order execution quality between brokers. As a result, the Financial Information Forum (FIF) has created a template that allows compare price improvement (= difference between price you eventually obtained vs. the price you saw quoted when you passed the order) between brokers: online brokers that participate voluntarily share their execution quality data in an agreed upon format that continues to evolve.
How can I compare the order execution quality between two brokers if they don't follow the FIF's template?
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kurtosis · External communityPost link
External answer — Personal Finance Stack Exchange
Author: kurtosis
Original post: https://money.stackexchange.com/a/129956
License: CC BY-SA 4.0 — https://creativecommons.org/licenses/by-sa/4.0/
Adaptation: HTML converted to plain text; contact email addresses removed.
If you want to compare execution quality, the more useful reports are usually those based on SEC rule
605
, not 606.
Rule 605
(previously 11Ac1-5) requires monthly electronic disclosure in a standardized format of
information about each market center's quality of executions on a
stock-by-stock basis, including how market orders of various sizes are
executed relative to the public quotes ... effective spreads (the spreads
actually paid by investors whose orders are routed to a particular market
center) ... [and] the extent to which they provide executions at prices
better than the public quotes to investors using limit orders.
Rule 606
requires quarterly electronic disclosure in a standardized format of routing practices and payments (for order flow or profit-sharing)
[grouped] by (i) stocks included in the S&P 500 Index as of the first day of the quarter and (ii) other NMS stocks.
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Quoted from Forex.com.bd-Editorial External answer — Personal Finance Stack Exchange Author: kurtosis Source score (net votes, not local likes): 1 Original post: https://money.stackexchange.com/a/129956 License: CC BY-SA 4.0 — https://creativecommons.org/licenses/by-sa/4.0/ Adaptation: HTML converted to plain text; contact email addresses removed. If you want to compare execution quality, the more useful reports are usually those based on SEC rule 605 , not 606. Rule 605 (previously 11Ac1-5) requires monthly electronic disclosure in a standardized format of information about each market center's quality of executions on a stock-by-stock basis, including how market orders of various sizes are executed relative to the public quotes ... effective spreads (the spreads actually paid by investors whose orders are routed to a particular market center) ... [and] the extent to which they provide executions at prices better than the public quotes to investors using limit orders. Rule 606 requires quarterly electronic disclosure in a standardized format of routing practices and payments (for order flow or profit-sharing) [grouped] by (i) stocks included in the S&P 500 Index as of the first day of the quarter and (ii) other NMS stocks.
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