Ameritrade Is Accused of Delaying Trades

Quote from kb44:

I'm one of those idiots using them now... can someone suggest a better brokerage firm to use? Is IB the best out there? Thanks
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I'd suggest using a firm that does not have any proprietary trading if you have the same conspiracy theory as some of the posters in this thread. (Ameritrade does).

A firm that strictly passes on our order to a market center cannot be accused of ever trading your order for their own account and giving you a bad price for their gain. Correction, these conspiracy theorists can still accuse them, but it doesn't happen.

However, you're still having to deal with issues with the market makers that get the order...ala Knight Trading Group. That though will be there no matter who your broker is.

http://www.securitiesfraudfyi.com/knight_trading_group.html
 
ameritrade has a siginifcant ownership position in knight + gets paid for order flow.

how do you know ameritrade trades prop.?
 
kb44


Registered: Jun 1999
Posts: 1


08-14-05 07:55 AM

I'm one of those idiots using them now... can someone suggest a better brokerage firm to use? Is IB the best out there? Thanks


are you rip van winkle? you registered in jun 1999 and this is your 1st post.
something is not right.
 
Quote from zdreg:

ameritrade has a siginifcant ownership position in knight + gets paid for order flow.

how do you know ameritrade trades prop.?
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I was told by one of their reps on the phone that they did when I asked about a customer's execution of a stock while it was halted. They said they filled the customer's order off of their own books.

After doing more research though I don't believe the rep knew what he was talking about and I don't believe they trade for their own account.

Here's what how they described themselves in one of their filings to the SEC on a proposed rule change:

Ameritrade Holding Corporation (“Ameritrade Holding”) has a 30-year history of providing financial services to selfdirected
investors. Ameritrade Holding’s wholly owned subsidiary, Ameritrade, Inc., acts as a self-directed broker serving
an investor base comprised of over 3.6 million client accounts. Ameritrade does not solicit orders, make discretionary
investments on behalf of our clients, or provide proprietary research or advice regarding securities. Rather, Ameritrade
empowers the individual investor by providing them with tools they need to make their own investment decisions. In
exchange for a low commission, we accept and deliver the order to buy or sell securities to the appropriate exchange,
market maker, electronic communications network or other alternative market for execution. Ameritrade does not trade
for its own account or make a market in any security.

http://www.sec.gov/rules/proposed/s71104/pmesposito5395.pdf

Yes, we all get paid for order flow to Knight, not just Ameritrade. And I believe quite a few firms have an ownership stake in Knight. Not sure the % now but here's how it was in the past:

http://www.oag.state.ny.us/investors/1999_online_brokers/market_makers.html
 
A little dated. Pmt for flow is so 90's. :) :)

Quote from spreadgod:

I was told by one of their reps on the phone that they did when I asked about a customer's execution of a stock while it was halted. They said they filled the customer's order off of their own books.

After doing more research though I don't believe the rep knew what he was talking about and I don't believe they trade for their own account.

Here's what how they described themselves in one of their filings to the SEC on a proposed rule change:

Ameritrade Holding Corporation (“Ameritrade Holding”) has a 30-year history of providing financial services to selfdirected
investors. Ameritrade Holding’s wholly owned subsidiary, Ameritrade, Inc., acts as a self-directed broker serving
an investor base comprised of over 3.6 million client accounts. Ameritrade does not solicit orders, make discretionary
investments on behalf of our clients, or provide proprietary research or advice regarding securities. Rather, Ameritrade
empowers the individual investor by providing them with tools they need to make their own investment decisions. In
exchange for a low commission, we accept and deliver the order to buy or sell securities to the appropriate exchange,
market maker, electronic communications network or other alternative market for execution. Ameritrade does not trade
for its own account or make a market in any security.

http://www.sec.gov/rules/proposed/s71104/pmesposito5395.pdf

Yes, we all get paid for order flow to Knight, not just Ameritrade. And I believe quite a few firms have an ownership stake in Knight. Not sure the % now but here's how it was in the past:

http://www.oag.state.ny.us/investors/1999_online_brokers/market_makers.html
More...
 
Quote from JMartinez:

A little dated. Pmt for flow is so 90's. :) :)
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Dated??? Here's a recent disclosure from a broker/dealer 3 months ago:

In November 2000, the Securities and Exchange Commission adopted Exchange Act Rule 11Ac1-6 (“Rule”), which became effective on July 2, 2001. The Rule requires all broker-dealers that route orders in equity and option securities to make publicly available quarterly reports that present a general overview of their routing practices. These reports must identify the significant venues (exchanges, market makers, etc.) to which customer orders were routed for execution during the applicable quarter and also disclose the material aspects of the broker-dealer’s relationship with such venues.

In compliance with this rule, we are providing the following summary of order routing activity for the second quarter of 2005 along with additional detail on the firm’s order routing practices and available execution services. For more information on Rule 11Ac1-6, please access the Securities and Exchange Commission website at

http://www.sec.gov/rules/final/34-43590.htm.

edit: this website link is not working, but you can do a search on www.sec.gov for regulatory action 43590 and the page will display.

REMUNERATION

LISTED

Boston Stock Exchange (BSE) Rebates are received from the BSE Specialist Association for orders routed to the BSE for execution. Rebates are dependent on the type of security and averaged
$0.0021/share for the 3-month period ending May 31, 2005.

Chicago Stock Exchange (CHX) Rebates are received from the CHX Association and Specialist firms for orders routed to the CHX for execution. Rebates are a flat rate that may be volume related, and may be reduced or eliminated on orders that are pre-opening, odd lots or price improved. Payments for the 3-month period ending May 31, 2005, averaged $0.0003/share.

Knight Capital Markets, LLC (Knight) Payment is received from Knight for directing equity orders to Knight. Payment is variable based on a percentage of Knight's profit on the subject orders. Payments for the period ending May 31, 2005, averaged $0.0001/share.

OTC

Chicago Stock Exchange (CHX) Rebates are received from CHX Specialist firms for orders routed to the CHX for execution. Rebates are dependent upon a percentage of the spread at the time of order entry, and may be reduced or eliminated on orders that are pre-opening, limit orders, orders for low priced issues, Manning executions or orders that are priced improved. Payments for the 3-month period ending May 31, 2005, averaged $0.0006/share.

Knight Equity Markets (Knight) Payment is received from Knight for directing equity orders to Knight. Payment is variable based on a percentage of Knight's profit on the subject orders. Payments for the period ending May 31, 2005, averaged $0.0001/share.

Automated Trading Desk (ATD) Payment is received from ATD for directing equity orders to ATD. Payment is variable based on a percentage of ATD's profit on the subject orders. Payments for the period ending May 31, 2005, averaged $0.0001/share.
 
Pmt for flow is sooo profitable that the boston floor is almost empty? Philly almost dust. It's more like they will do it for free now. If the flow is too pro then they will charge you for it. I just happen to know because I used to buy and sell flow myself. That market for pmt for flow is pretty much gone now. Decimals killed it and made it not as profitable for those firms to pay for it now. Those were the good old days pmt. The pmt now are rebates from the ecns :) You might have noticed Knight made less money this year?


Quote from spreadgod:

Dated??? Here's a recent disclosure from a broker/dealer 3 months ago:

In November 2000, the Securities and Exchange Commission adopted Exchange Act Rule 11Ac1-6 (“Rule”), which became effective on July 2, 2001. The Rule requires all broker-dealers that route orders in equity and option securities to make publicly available quarterly reports that present a general overview of their routing practices. These reports must identify the significant venues (exchanges, market makers, etc.) to which customer orders were routed for execution during the applicable quarter and also disclose the material aspects of the broker-dealer’s relationship with such venues.

In compliance with this rule, we are providing the following summary of order routing activity for the second quarter of 2005 along with additional detail on the firm’s order routing practices and available execution services. For more information on Rule 11Ac1-6, please access the Securities and Exchange Commission website at

http://www.sec.gov/rules/final/34-43590.htm.

edit: this website link is not working, but you can do a search on www.sec.gov for regulatory action 43590 and the page will display.

REMUNERATION

LISTED

Boston Stock Exchange (BSE) Rebates are received from the BSE Specialist Association for orders routed to the BSE for execution. Rebates are dependent on the type of security and averaged
$0.0021/share for the 3-month period ending May 31, 2005.

Chicago Stock Exchange (CHX) Rebates are received from the CHX Association and Specialist firms for orders routed to the CHX for execution. Rebates are a flat rate that may be volume related, and may be reduced or eliminated on orders that are pre-opening, odd lots or price improved. Payments for the 3-month period ending May 31, 2005, averaged $0.0003/share.

Knight Capital Markets, LLC (Knight) Payment is received from Knight for directing equity orders to Knight. Payment is variable based on a percentage of Knight's profit on the subject orders. Payments for the period ending May 31, 2005, averaged $0.0001/share.

OTC

Chicago Stock Exchange (CHX) Rebates are received from CHX Specialist firms for orders routed to the CHX for execution. Rebates are dependent upon a percentage of the spread at the time of order entry, and may be reduced or eliminated on orders that are pre-opening, limit orders, orders for low priced issues, Manning executions or orders that are priced improved. Payments for the 3-month period ending May 31, 2005, averaged $0.0006/share.

Knight Equity Markets (Knight) Payment is received from Knight for directing equity orders to Knight. Payment is variable based on a percentage of Knight's profit on the subject orders. Payments for the period ending May 31, 2005, averaged $0.0001/share.

Automated Trading Desk (ATD) Payment is received from ATD for directing equity orders to ATD. Payment is variable based on a percentage of ATD's profit on the subject orders. Payments for the period ending May 31, 2005, averaged $0.0001/share.
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Quote from JMartinez:

Pmt for flow is sooo profitable that the boston floor is almost empty? Philly almost dust. It's more like they will do it for free now. If the flow is too pro then they will charge you for it. I just happen to know because I used to buy and sell flow myself. That market for pmt for flow is pretty much gone now. Decimals killed it and made it not as profitable for those firms to pay for it now. Those were the good old days pmt. The pmt now are rebates from the ecns :) You might have noticed Knight made less money this year?
More...

Sorry for the delayed response....I was sailing in the Bahamas, right before Hurricane Katrina thank God!

Please explain how they will tell if the flow is too pro or not.

I'm not saying it's more or less profitable than the 90's, just that we are still being paid for order flow. The NYSE, on the other hand, makes us pay. You figure that one out.
 
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