Lightspeed Order Flow Finra Violation Dissappointment, Suggestions?

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Yogi88

I'm trying to research the best broker for the absolute fastest execution times and fills.
I was led to believe that lightspeed with its direct market access was the best.

But I was checking the violations on Finra and came across this recently, from 02/02/2021:

THE COMMISSION FINDS THAT THESE PROCEEDINGS ARISE FROM THE MISREPRESENTATIONS AND OMISSIONS THAT, LIGHTSPEED TRADING,LLC, AN INTRODUCING BROKER, MADE TO ITS CUSTOMERS ABOUT HOW IT WOULD DIRECT THEIR ORDERS TO TRADE EQUITY SECURITIES AND THE FEES IT WOULD CHARGE FOR EXECUTING SUCH ORDERS ("MARKETCENTER FEES").

LIGHTSPEED TOLD ITS CUSTOMERS THEY COULD DIRECT THEIR ORDERS TO THE TRADING VENUES OF THEIR CHOICE AND THEY WOULD BE CHARGED THE MARKET CENTER FEES THAT LIGHTSPEED INCURRED IN EXECUTING THEIR ORDERS.

IN REALITY, LIGHTSPEED DISREGARDED MANY OF ITS CUSTOMERS' DIRECTIONS AND INSTEAD SENT THOSE ORDERS TO AN AFFILIATED BROKER-DEALER (THE "ROUTING BROKER"), WHICH ROUTED THE CUSTOMER ORDERS FOR EXECUTION AND GENERALLY CHARGED LIGHTSPEED NO OR LOW MARKET CENTER FEES.

LIGHTSPEED FAILED TODISCLOSE THE ROUTING BROKER'S INVOLVEMENT AND NEVER DISCLOSED TO ITS CUSTOMERS THAT IT ROUTED THEIR ORDERS INCONTRAVENTION OF THEIR DIRECTIONS. DESPITE MISDIRECTING ITS CUSTOMERS' ORDERS, LIGHTSPEED STILL CHARGED ITS CUSTOMERS THE FEES FOR THE MARKET CENTERS THAT THEY HAD SELECTED, EVEN THOUGH LIGHTSPEED INCURRED LOWER FEES OR NO FEES AT ALL.
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- Disclosure #1 on https://files.brokercheck.finra.org/firm/firm_35519.pdf

I take a look at their website and they now note this under the routing fees:

If you select a venue for order routing, Lightspeed may handle as not held. Regardless of the route selected in the dropdown, hot button, or hot key, the Firm may first direct that order through a vendor and may receive discounted execution fees and/or payment for order flow through that vendor that it does not pass on to its clients.
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- https://www.lightspeed.com/pricing/routing-fees/

So I'm directing an order, and paying for that direct order, but instead they're routing it somewhere else, and I imagine introducing a delay, against directions and what I would have paid for. What is the point of even setting up hotkeys for different exchanges? How is that direct market access?

I might as well use a comission free broker then?

Does anyone have a broker that they would recommend even in highly volatile situations to execute your order in the fastest possible way, while still getting filled and without unnecessary or unbeneficial delays?

I want (large-ish) orders to get filled and I want to be filled fast, repeatedly consistently, and for both market orders and limit orders of various types - even when the roof comes falling down or we're taking off.

Despite their routing issue, is lightspeed still the best? And which route should I select to get the best?

Thank you.
 
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Does not happen with Interactive Brokers (non lite version) that I know for sure. They may not be the cheapest and their margin policy is out of whack at times but there is a reason I stuck with them for almost the past 20 years. I learned throughout my years that a broker is not to be trusted where either the broker itself or its salesmen constantly refuse to discuss commissions, margin policies, financing rates, borrow rates in broad public and ask you to discuss privately. I can name you a few other highly reputable brokers for cash fx but can't help much if you look for equity executions. Perhaps others can chime in.

Yogi88 said:
I'm trying to research the best broker for the absolute fastest execution times and fills.
I was led to believe that lightspeed with its direct market access was the best.

But I was checking the violations on Finra and came across this recently, from 02/02/2021:



- Disclosure #1 on https://files.brokercheck.finra.org/firm/firm_35519.pdf

I take a look at their website and they now note this under the routing fees:



- https://www.lightspeed.com/pricing/routing-fees/

So I'm directing an order, and paying for that direct order, but instead they're routing it somewhere else, and I imagine introducing a delay, against directions and what I would have paid for. What is the point of even setting up hotkeys for different exchanges? How is that direct market access?

I might as well use a comission free broker then?

Does anyone have a broker that they would recommend even in highly volatile situations to execute your order in the fastest possible way, while still getting filled and without unnecessary or unbeneficial delays?

I want (large-ish) orders to get filled and I want to be filled fast, repeatedly consistently, and for both market orders and limit orders of various types - even when the roof comes falling down or we're taking off.

Despite their routing issue, is lightspeed still the best? And which route should I select to get the best?

Thank you.
More...
 
DiceAreCast said:
Does not happen with Interactive Brokers (non lite version) that I know for sure. They may not be the cheapest and their margin policy is out of whack at times but there is a reason I stuck with them for almost the past 20 years. I learned throughout my years that a broker is not to be trusted where either the broker itself or its salesmen constantly refuse to discuss commissions, margin policies, financing rates, borrow rates in broad public and ask you to discuss privately. I can name you a few other highly reputable brokers for cash fx but can't help much if you look for equity executions. Perhaps others can chime in.
More...

Thank you for your response.

I've heard contradictory things for Interactive Brokers. They were originally my first choice.

In the UK they do not offer a lite and a pro service, there's just one package as far as I know, and I've been told it's not recommended for scalping strategies, and it's not because the program is written in Java (because then you could just use DasTrader with it and pay a bit more) but more to do with the executions. In fact someone told me Trading212 had better fills than IB for him - and Trading212 is like Robinhood but for the UK. That put me off and I did more research.

Numerous youtube videos I've seen recommend against IB for scalping due to fills, including a video by warrior trading in 2019 where he talks about disastrous fills and why he will never use interactive brokers again - but if you go on his website to see the broker comparisons, and the part about payment for order flow and direct market access...the one he still has as his recommendation is IB.

Then again he also says Lightspeed uses direct market access and not payment for order flow, and we know that's not true either.

I would greatly appreciate input from someone who has compared a few of the better ones in recent times. I know it's asking a lot. And I may eventually have to compare a few myself but was hoping to hear the top recommendations.

And if anyone is still recently satisfied with Lightspeed when daytrading volatile stocks, even low floats and what they use for order routing.

Or any input about this in general, would love to hear more.

It all seems a bit hush hush, but what are we paying high comissions for exactly?

I've heard great things about Fidelity's execution speed. I think they internalise the orders instead of getting paid for it, but they're rated very highly in terms of speed and don't have comissions, or they're very low. But I'm not sure if it's the same for Fidelity International...or how professional their platform is.
 
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What year was this for 2012? That was different times back then. The regulations are more strict now, so you should be ok.
I know these things leave a bad taste, but in reality, if you trade manually (or automated but non-collocates), it matters very little.

Yogi88 said:
Numerous youtube videos I've seen recommend against IB for scalping due to fills, including a video by warrior trading in 2019 where he talks about disastrous fills and why he will never use interactive brokers again
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This is because he takes liquidity on very thin stocks which boarder lines on market manipulation. It appears IB is very cautious about these things and is not afraid to loose these kind of clients.
 
d08 said:
Lite is only in US. All European customers get the "pro" version.
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Thank you for confirming, that is what I thought.

qlai said:
What year was this for 2012? That was different times back then. The regulations are more strict now, so you should be ok.
I know these things leave a bad taste, but in reality, if you trade manually (or automated but non-collocates), it matters very little.
More...

It's from Februrary 2021, and Lightspeed at the moment has the payment for orderflow and ignoring your actual order routing term on their current website in plain sight - which is what they were actually fined for - misinforming customers.

I appreciate you're reassurance but I don't see the benefit of paying comission if I'm still not getting direct market access as I was led to believe.

Is there payment for order flow system still faster than anything else out there for retail? Do you still get the best fills...or have things changed now, are there better alternatives that do respect the order routing that you pay for. I guess that's what I want to find out.

This is because he takes liquidity on very thin stocks which boarder lines on market manipulation. It appears IB is very cautious about these things and is not afraid to loose these kind of clients.
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From the video he posted it seems the volume was around 100K at the time of his order.


Low float stocks, while risky because they can move either direction very quickly, are also quite appealing to a momentum trader.

I've seen and spoken directly to a few people now who have scared me away from IB, or at least made me more interested in exploring alternatives first.

If I get worse fills with IB than with my commission-free broker... there is no benefit there for me. Trading212 is basically Robinhood!
 
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qlai said:
Can you provide a link please?
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That's strange, they should show up in the first post - I sourced all the quotations:

Finra document showing Lightspeed misleading customers about order routing:
Disclosure #1 on https://files.brokercheck.finra.org/firm/firm_35519.pdf

Lightspeed's term on their routing fee page about ignoring what route you send the order to, and their ability to just sell the order instead: https://www.lightspeed.com/pricing/routing-fees/

qlai said:
Center Point Securities
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Thank you very much!

- It seems CenterPoint Securities also have terms about payment for order flow.

https://centerpointsecurities.com/w...ayment-for-Order-Flow-and-Order-Routing-1.pdf

But it does seem that Lightspeed and centerpoint are the most highly recommended so far.

- This website talks about a few of these brokers, updated in 2020, and suggests Centerpoint and Lightspeed don't do payment for order flow so maybe it's a new change.

https://daytradingz.com/best-online-brokers-for-day-trading/

Interestingly they mention this about IB:

Unfortunately, Interactive Brokers uses filtered tick data. Direct-access brokers like Cobra Trading provide unfiltered tick data.
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Yogi88 said:
That's strange, they should show up in the first post - I sourced all the quotations:
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Sorry, I just didn’t scroll far enough. So it says 2015-2016. So I guess it means they are clean now :).
 
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