TD Ameritrade Admits "Virtually Always" Sells Retail Orders To HFTs

Tyler Durden's picture

Yesterday's Katsuyama vs High Freaks battle was once again a game of distraction from the facts. However, despite one member of the panel's desperate attempts to show how great and good HFT was for poor old retail, it was Carl Levin that nailed TD Ameritrade - which handles massive amounts of retail stock orders - for "virtually always" having a conflict of interest in its decision to seek the market that paid them the most as opposed to the one that provided best execution for the client. Perhaps it was John McCain that summed up the farce best when he exclaimed, "Mr. Brennan [Vanguard's head], I don’t accept your allegation that everything is fine."

As NYTimes reports,

TD Ameritrade, a brokerage firm that handles vast numbers of stock trades for average investors, promises to execute those orders on the best possible terms.


But in practice, TD Ameritrade routes a large number of the customer orders to the exchanges that pay it the most, Steven Quirk, an executive at the firm, said at a Senate hearing on Tuesday.




Mr. Levin pointed to different data from the first quarter of this year that showed that TD Ameritrade routed its nonmarketable orders to two markets that paid the highest rebates available.


“So, again, your subjective judgment as to which market provided best execution for tens of millions of customer orders virtually always led you to route orders to the markets that paid you the most?” Mr. Levin asked.


“No, not always led us...” Mr. Quirk began.


“I said ‘virtually always,’ ” Mr. Levin responded.


After a short pause, Mr. Quirk said, “Virtually, yeah.”

But perhaps John McCain nailed it best...

Mr. McCain said this reminded him of a story about a man in a small town who played poker even though he knew it was crooked, because “it’s the only game in town.”


“Mr. Brennan,” Mr. McCain added, “I don’t accept your allegation that everything is fine.”

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maskone909's picture

might aswell turn all the HFT's into brokerages.  whats the fcking diff?

mayhem_korner's picture



Same as the difference between hookers and pimps.

alien-IQ's picture

you mean one gets fucked so the other can get paid?

Hippocratic Oaf's picture

Slap 'em with a 10million fine while they net 500million


Extortion from both ends

Retail loses

TheLooza's picture

As somone who has lost $250,000 options trading using Amewritrade, I observed phenomenon I thought nearly impossible to chalk up to just bad luck that correlated almost precisely with my purchase.  

I do wonder what a class action lawsuit against ameritrade would look like....

Rainman's picture

Like most CALs, upon winning you will be awarded a check for about $35.66 net of lawyer fees.

Say What Again's picture

Wait a minute.

Are you trying to tell me that TD-Meritrade was NOT looking out for my best interest?

I find that hard to believe.

Four chan's picture

i traded thir rigged market since they were waterhouse my check should be 39.01.

scam_MERS's picture

Hell, I was with them from back when it was Kennedy, Cabot & Co in the early 90s. Then it was Waterhouse, then TD Waterhouse, then Ameritrade, now TD Ameritrade. They've sucked since day one, it's only gotten worse over time. Lousy customer service to boot! I went to Schwab and haven't had an issue yet that can't be resolved with one phone call. This story is just icing on the cake with TD, no one should be surprised they trade for their benefit and not yours.

alien-IQ's picture

it would look like an opportunity for lawyers to make a fuck-load of cash while the people that got fucked by TDA get fucked again by the legal system and then fucked yet again by their own lawyers.

does that sound accurate enough?

NidStyles's picture

I want to know when I can start renting time on one of these HFT servers. 

Colonel Klink's picture

You'll get a free years membership to continue your ass raping, the lawyers will get all the cash value.

Freddie's picture

Some of the worst are options "Gurus" pimping for these brokerages including TOS and others.  They are in Texas, Utah, Chicago (Tom), Kentucky and a few others.  Many of these gurus are frontrunning their customers too.  They suck people in and they get eaten alive by the broker, market makers, HFTs, etc.

They generate a lot of order flow.  I followed one of the gurus and they had mega churn in customers because most of the people were losing money.

pelican's picture

Personally, I don't trust any of it. Not 401k, not single trades, etc.

twh99's picture

You don't need a fine.  Tax them $1 for each trade they cancel before execution.  Right now these are cost-free.

Kirk2NCC1701's picture

And yet we still call them "Markets".

HedgeAccordingly's picture

– JPM CFO Ruth Porat on high-frequency trading and regulation

Colonel Klink's picture

Ruth Porat(Ashkenazi Jew) – Executive Vice President and Chief Financial Officer


Felchmeister to defend the tribe in 3...2...1...

Kirk2NCC1701's picture

I get that, Klink.  They're just looking out for their own -- to an extreme -- and they have a Master Plan that all are working to.  So what!?  It's what a strong and homogenous group would and should do, to survive for millenia.  You're asking the wrong questions - your ladder is against the wrong wall, so to speak.

Here are the REALLY awkward & embarrassing questions for "Christians" (claiming to be followers of Christ):

1. Who (the fuck) is looking out for them?  Other "Christians"?  Hardly, if you look at history of the last 1,000 years.

2. At what point does a person admit that their Worldview (philosophy or brand of religion) is no longer adequate to deal with reality?  "Adapt or perish" - Mother Nature.

3. Do you still not realize that "turning the other cheek", "love thy neighbor", etc and other Semitic "aphorisms for Sheeple" are meant to be applied only WITHIN the group, and that a Quid Pro Quo rule MUST apply to those outside?  Lest you become the Indigenous & Symbiotic species that gets taken over by an Invasive & Predatory species.  "Adapt or perish" - Mother Nature.  Repeated for emphasis.

You'd all be better off being followers of Ragnar Lothbrok, than followers of that Hippie Healer-Philosopher, who was promoted to Deity status and whose accomplishments were recorded many decades later, i.e. after having circulated by word-of-mouth via many, many people and several generations.  Yeah, that's a real error-proof method of recording history, right?  Try that today.  Pfff.

Bottom Line:  As long as Christians and Muslims keep fighting and killing their own kind and each other, they will regress to a rabble of little people, and useful Sheeple.  But, hey, I realize that Cognitive Dissonance is a bitch, when having to overcome a lifetime of mantras, brainwashing and conditioning (by the Church and State).  Which is why I keep re-posting this word of advice:

"To give up all illusions and pretenses, is the beginning of true wisdom" - Kirk out.

Colonel Klink's picture

I like to look at other points with a keen eye.  Like if they say, do unto other as you'd have done unto you.  Then it's fair game to do unto those, as they do unto others.  Also do unto others before they do unto you.

As for turning cheek, it's usually on the other person, and it's their ass I'm kicking.  I don't subscribe to "man's law/words"  I prefer to look at nature's law and the laws of survival.  Mean harm to me, and I'll be more apt to bury you.

The big story book, written by those who wished to have control over others through "scripture".  Pass!

slaughterer's picture

One mistake here: Kev' gets the retail orders before HFT gets it. 

Freddie's picture

I talked to some hedge options guys in NYC.  They said Interactive Brokers was the least scummy of the online brokerages.  They said if your account is over $1 million then the obline brokerage firms F**k with you less.

They said IB was decent.

maskone909's picture

i think that house is run by that guy with all of the "obama is a socialist" ads from the pres campaign.  seems like a straight shooter.

Freddie's picture

Hungarian-American name Thomas Petterffy.  He seems like a good guy. He was a trader and programmer.

I am not pimping for Interactive Brokers.  The traders I have talked to said their fills are better than the others.  They said TD/TOS plus the others jack your orders.  If your acct is over $1 million or more then they rip you off less.   They said IB is much better than the rest of the pack.

I have heard this from other traders as well.  I am not crazy about the options fills at TOS (TD).  They are not very good.

alien-IQ's picture


Everything's not fine?

NoWayJose's picture

Translation of "Mr. Brennan [Vanguard's head], I don’t accept your allegation that everything is fine"

In the language of common folk - "Mr. Brennan, you will need to increase our war chests in this election year if you wish to continue business as usual."

Seasmoke's picture

glad to hear than Sen. Johnson has no problems getting his $2000 insider trading orders filled. 

Also, if I understand him correctly, he has no problem , if I go to Wal-Mart daily and steal a pack of gum, every day. 

Dollar Bill Hiccup's picture


Ha, but the little guy neither knows nor cares ... beyond knowing that most everything around him / her is out of whack.

Rainman's picture

" Sounds to me like you guys is a couple of bookies "

                 Billy Ray

highly debtful's picture

You know, I can think of a lot of questions regarding the economy that can be answered with a simple "Virtually, yeah."

NotApplicable's picture

I prefer "theoretically" as it sounds much more intelligent and sciencey. Not to mention, you can add "ceteris paribus" in support of the theory and it becomes impossible to rebut as the theory can never exist in reality.

I should of been a sophist. If only I was that evil.

slightlyskeptical's picture

I use Ameritrade. I usually get filled below my bid by some fractions of a cent. Am I getting best execution? Really hard to say.without some really specialized knowledge.

Freddie's picture

If your account is $1 million or more - online brokerages will give you decent fills.  Interactive Brokers is supposedly the best of the bunch in fills aka they F you less than the others.

Freddie's picture

I am not shilling.  Just offering a least bad alternative.  People are better off staying out of the whole ponzi scheme.

Ponzi Pontiff's picture

You said it once, it was advice.

You said it twice, it started to sound rehearsed.

You said it three times, you're shilling.

This is Fight Club - you only need to say it once.  The folks here are smart enough to get it without you having to repeat yourself over and over like fucking CNN.

prmths2's picture

IB has its problems, but it is the only broker I have seen that has negative commissions on certain trades. Some exchanges offer rebates for limit orders off the bid and ask that increase market liquidity. With IB it is possible to execute at a limit price and have a negative commission.

matinee55's picture

well, how you feel knowing they don't have your best interests at heart- but their profit margin

Bangback's picture

Almost certainly you (and I) are not.  There is another ask you're not seeing that's even lower.  The HFT undercut the posted ask (making you somewhat happy), then immediately buy the stock from an even lower ask in a dark pool somewhere. That dark pool ask should have been yours. The $10/trade commission is just the loss leader on you getting ripped off on execution.  If it were free, you'd be suspicious.  At $10, you think you're getting a great deal.

Back in the day, Ameritrade refused to route your order to be the listed bid or ask (inside the spread).  Your order was only filled if it hit the bid or ask. Fortunately regulators banned this practice.

16ths, forced routing of orders, HFT.  Always a new scam on the retail investor.  I've tried most (though not IB) -- they're all the same.


Freddie's picture

TD bought Datek back in the day and Datek and Island ECN were the same pirate scum.

klinko's picture

That .0001 is in your "favor" but even so, the other .0099 of the spread isn't going to make a difference in your trading anyway. It's insignificant to what your overall p/l will be. The retail trading risk is the movement, not the liquidity. Giving up the spread occurs in all parts of the business. You give the HFTs this business, because without it, you'd be paying more. All retail brokerages do the same thing. They route find all open orders at high bid & low ask, then route to the one that pays them the most. You're still going to the NBBO. If you don't like it, direct route. They all offer this. And if you still don't like it, open a HFT firm and call it a day. With all of the anti-government, free market sentiment on this site, don't fall back into the trap and compromise and demand regulation when it helps you. Just stay out.

JenkinsLane's picture

Class action lawsuits coming to TD?

Freddie's picture

John McCain asked a tough question?  I guess Wall Street is not sending his pals ISIS enough money.  Maybe Wall Street can do an IPO on ISIS.   They can call it

Quinvarius's picture

I am pissed McCain finally found someone or something he didn't want to bomb...and it needs bombing.

RaceToTheBottom's picture

The MIC crew had a backroom meeting with the WS crew.

paint it red call it hell's picture

If mccain is involved and the one throwing out the hot media sound bite, we all know where HFT investigation  is going, right?


I Write Code's picture

My last market execution at Schwab came within half a penny of the last quoted price, it was probably from their own "dark pool" but I'm OK with it.