TD Ameritrade Discloses Order Routing Revenue Sharing
June 12 2014 - 5:30PM
Business Wire
TD Ameritrade Holding Corporation (NYSE: AMTD) is today
disclosing information as it relates to revenue sharing1 it
receives for the trade orders routed to market destinations for
execution. The Company plans to disclose this revenue on a
quarterly basis, beginning with its June Quarter earnings release
in July 2014.
The Company earned order routing revenue of $236 million, $184
million and $185 million for fiscal years 2013, 2012 and 2011,
respectively. Note that less than 50 percent of its 2013 revenue
sharing came from stock transactions.
TD Ameritrade employs sophisticated order routing technology and
processes to help it meet its obligations to seek best execution
for client orders. The system is flexible, with the ability to
route to several destinations in an effort to seek best execution
quality. Clients also have the option to choose from a list of
direct-routing destinations.
TD Ameritrade does not internalize its clients’ orders. Instead,
it works with multiple market destinations to encourage competition
and create redundancies that help maintain a seamless client
experience. The Company holds these market destinations to high
performance standards, as it evaluates their stability, execution
quality and consistency daily. In the unlikely event of a
degradation of service, TD Ameritrade has the flexibility to adjust
by quickly routing orders to another venue. Information regarding
the revenue sharing arrangements the Company’s broker dealer
subsidiaries have with each of these market destinations is
disclosed publicly via SEC Rule 606 reports, client agreements and
client account statements.
“Many market destinations are in the business of making markets.
They provide liquidity, and revenue sharing is part of their
business model,” said Fred Tomczyk, president and chief executive
officer. “There exist today comprehensive regulations and
oversight, disclosure and industry competition, as well as the many
checks and balances we have implemented over the years, to ensure
that we remain focused on satisfying our obligation to seek best
execution on behalf of our clients. Without their trust and
satisfaction we wouldn’t have a business, and we could not maintain
either of them if we didn’t deliver on our promises to the best of
our abilities.”
“The facts show that execution quality for retail investors has
never been better,” Tomczyk continued. “Costs are lower than ever,
spreads have narrowed significantly, liquidity has increased, and
execution speed has improved. But it can be better. Just as we are
continually seeking to improve our client experience, we as an
industry should continue to examine ways in which we can improve
our nation’s market structure – without compromising the many
improvements that currently exist. We have long been a part of
conversations around market structure, representing one of the
largest bases of retail investors in the country, and we will
continue to do so.”
The Company will be sharing its views on this topic and other
market structure-related issues when it appears before the Senate’s
Permanent Subcommittee on Investigations on Tuesday, June 17,
2014.
About TD Ameritrade Holding Corporation
Millions of investors and independent registered investment
advisors (RIAs) have turned to TD Ameritrade’s (NYSE: AMTD)
technology, people and education to help make investing and trading
easier to understand and do. Online or over the phone. In a branch
or with an independent RIA. First-timer or sophisticated trader.
Our clients want to take control, and we help them decide how -
bringing Wall Street to Main Street for more than 39 years. An
official sponsor of the 2014 and 2016 U.S. Olympic and Paralympic
Teams, TD Ameritrade has time and again been recognized as a
leader in investment services. Please visit TD Ameritrade's
newsroom or www.amtd.com for more information.
Brokerage services provided by TD Ameritrade, Inc., member
FINRA (www.FINRA.org) /SIPC (www.SIPC.org) /NFA
(www.nfa.futures.org)
Safe Harbor
This document contains forward-looking statements within the
meaning of the federal securities laws. We intend these
forward-looking statements to be covered by the safe harbor
provisions of the federal securities laws. In particular, any
projections regarding our future revenues, expenses, earnings,
capital expenditures, effective tax rates, client trading activity,
accounts or stock price, as well as the assumptions on which such
expectations are based, are forward-looking statements. These
statements reflect only our current expectations and are not
guarantees of future performance or results. These statements
involve risks, uncertainties and assumptions that could cause
actual results or performance to differ materially from those
contained in the forward-looking statements. These risks,
uncertainties and assumptions include, but are not limited to:
general economic and political conditions and other securities
industry risks, fluctuations in interest rates, stock market
fluctuations and changes in client trading activity, credit risk
with clients and counterparties, increased competition, systems
failures, delays and capacity constraints, network security risks,
liquidity risks, new laws and regulations affecting our business,
regulatory and legal matters and uncertainties and other risk
factors described in our latest Annual Report on Form 10-K, filed
with the SEC on Nov. 22, 2013 and our latest Quarterly Report on
Form 10-Q filed thereafter. These forward-looking statements speak
only as of the date on which the statements were made. We undertake
no obligation to update or revise publicly any forward-looking
statements, whether as a result of new information, future events
or otherwise, except to the extent required by the federal
securities laws.
1 Also sometimes referred to as “payment for order flow”.
Source: TD Ameritrade Holding Corporation
TD Ameritrade Holding CorporationFor Media:Kim Hillyer,
Director, Communications & Public Affairs,
402-574-6523kim.hillyer@tdameritrade.com@TDAmeritradePRorFor
Investors:Jeff Goeser, Director, Investor Relations & Finance,
402-597-8464jeffrey.goeser@tdameritrade.com
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