How to Buy and Sell Mutual Fund on TD Ameritrade

Order Execution Time and Trade Speed at Brokerage Firms


2024 best and fastest trade executions at online discount brokerage firms. Order trade execution quality at TD Ameritrade, Fidelity, Etrade, TradeStation, Schwab and Interactive Brokers.


Overview of Trade Execution


Trade execution is when a broker-dealer completes your order for a stock, ETF, bond, or other security. When you place an order, the brokerage firm ensures it gets filled, or executed. The speed and cost of this service can vary greatly between brokers, so it's crucial to pay attention to this important aspect.


Speed at Which Trades are Executed


In fast-moving markets, how quickly an order is filled is very important. This is especially true for stock and option prices, which can change quickly. If your broker is a few seconds late, other traders might get the price you wanted. Since mutual fund orders are only filled at market close at NAV, and not market price, trade execution speed isn't crucial for these securities.


Price at Which Trades are Executed


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Execution Speed at Major Brokers


The speed at which a broker fills orders can vary widely in the industry. Here are a few examples with their current commissions:

Broker Time (sec) Commission
Interactive Brokers 0.05 $0
Charles Schwab 0.05 $0
TD Ameritrade 0.08 $0
Fidelity 0.05 $0
TradeStation 0.266 $0
Etrade 0.39 $0


Clearly, the price-speed comparison can vary widely among brokers. Also, keep in mind that the execution time can depend on how the broker routes the order. These order executions are for covered equity orders with 100-1999 shares.


How Brokers Fill Orders


When you submit an order to buy or sell a security, a broker has several options. It can fill the order internally with an order for the opposite position. It can also send the order to an electronic communications network (ECN) that quickly matches buy and sell orders. This is often how limit orders are handled.

The broker could also send your order to a market maker, which is a company that buys and sells stocks on major exchanges at publicly-quoted prices. These market makers sometimes pay brokerage firms to send orders their way. This is legal, but the broker must state on a trade confirmation if it has done this. Finally, brokers may send orders directly to an exchange, such as the New York Stock Exchange. Any of these options can have delays that could result in a fill far from the quoted price.

Also, many brokers allow you to request that an order be routed to a certain exchange or market maker. If you want your order to go to a specific ECN or other venue, be sure to specify your preference in the order ticket. If it doesn’t offer this option, call your broker to request it verbally.

The Securities and Exchange Commission regulates order execution. It tries to ensure the process is as transparent as possible. Brokerage firms and other companies involved in order fulfillment must submit written documents detailing the quality and sizes of orders, along with information about price improvement.

Price improvement occurs when a broker executes an order at a price better than the publicly-quoted price. This might take extra time. The SEC requires brokerage houses to look at the possibility of getting a better price and compare it to the risk of losing time in the stock market.


Interactive Brokers


IB SmartRouting SM is Interactive Brokers’ method of filling orders. The firm quickly looks for equity and derivative prices available when an order is submitted and tries to immediately execute the order electronically.

The Transaction Auditing Group analyzed IB’s order fulfillment system and found it beat the industry average for price improvement by 6¢. The broker surpassed the industry average for options by 24¢. IB’s software can also send orders to dark pools, which are private exchanges.

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Charles Schwab


Advanced routing technology is also available at Charles Schwab. The broker promises that the “vast majority” of orders placed on its website will get a price better than public quotes. Its own survey shows that more than 98% of market orders were filled at prices better than the National Best Bid/Offer (NBBO). The exact amount of improvement was $0.0129, which translates into $1.29 for every 100 shares.

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E*Trade


E*Trade offers a 2-second execution guarantee on all ETFs and S&P 500 stocks. To be eligible, an order must be between 100 and 500 shares to sell, buy, or buy to cover. The eligible time window is from 9:45 am until 3:59 pm, EST. If the broker fails to fill an eligible order within 2 seconds, it will give a free trade to the customer, although it can only be used for a trade eligible for the 2-second guarantee. The average execution speed of S&P 500 stocks at E*Trade is 0.08 seconds.

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Brokers Trade Execution Summary


When you submit an order, a lot goes on behind the scenes. How good your broker is partly determines the price you get.


Updated on 5/10/2024.


About the Author
Chad Morris is a financial writer with more than 20 years experience as both an English teacher and an avid trader. When he isn’t writing expert content for Brokerage-Review.com, Chad can usually be found managing his portfolio or building a new home computer.