News, Vision & Voice for the Advisory Community


Preparing to appear before Senate subcommittee, TD Ameritrade discloses order-routing revenue

The company made $236 million in revenue sharing in 2013

Friday, June 13, 2014 – 5:25 PM by Brooke Southall
no description available
Fred Tomczyk: Many market destinations are in the business of making markets. They provide liquidity, and revenue sharing is part of their business model.

TD Ameritrade Holding Corporation today disclosed the revenues it receives from the companies to which it routes trade orders.

The Omaha, Neb.-based company will disclose this revenue on a quarterly basis, beginning in July.

TD earned order-routing revenue of $236 million, $184 million and $185 million for fiscal years 2013, 2012 and 2011, respectively. Less than half its 2013 revenue sharing came from stock transactions.

Such routing is part of its business model, according to a prepared statement from TD. Representatives of the firm will speak on this topic and other market- structure-related issues when they appear before the Senates Permanent Subcommittee on Investigations Tuesday. TD did not disclose who is appearing before the subcommittee. See: What Tom Bradley’s 25-year reign at TD Ameritrade says about the RIA business.

What the company will say is that it employs sophisticated order-routing technology and processes to help it meet its obligations to seek best execution for client orders. The key point TD will apparently stress in its Senate appearance, according to Fred Tomczyk in a prepared statement, is that the he system is flexible and therefore a win for all parties involved since its flexibility lies in its 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. See: Fred Tomczyk shows RIAs at TD’s 'Elite’ event his drive to beat rivals — by carefully picking his spots.

Promise to deliver

“Many market destinations are in the business of making markets. They provide liquidity, and revenue sharing is part of their business model,” Tomczyk said in the statement. See: TD Ameritrade chief calls RIA growth a significant factor in 44% 4Q surge.

“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.”

Tomczyk added: “The facts show that execution quality for retail investors has never been better. 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.” See: Analysts issue opinions on Merrill Lynch and TD Ameritrade based on new information.

Related Moves

Robinhood gets 'brilliant' upper manager -- and a spare CEO -- by nabbing TD Ameritrade's ex-thinkorswim top exec, hopefully to throw a lifesaver to Robinhood's sinking stock

The Menlo Park, Calif., firm nabbed Steve Quirk as first-ever chief brokerage officer to 'bridge the gap between academia and reality.'

January 6, 2022 – 10:33 PM

Oisín's snippets: Charles Schwab brand goes up on Omaha's TD Ameritrade stadium, home of college baseball world series • Interactive Brokers lands an RIA custody insider, Charlie Latimer, to climb the custodian ladder

The TDA brand lives on until the techies figure out how to make two systems into one, but change is in the air in Omaha, while Interactive Brokers gets a leg up in the custody business with a new hire.

December 27, 2021 – 9:58 PM

Goldman Sachs nabs TD Ameritrade's Darla Sipolt for RIA custody; Kate Healy, Jim Dario and Peter Dorsey are among 1,000 staffers cut by Schwab post TD merger

Included in the wholesale reduction of the Omaha, Neb.-based broker's redundant talent, about 40% of TD Ameritrade's marketing staff also got word today they have no future with their San Francisco-based owner

October 27, 2020 – 1:20 AM

Skip Schweiss exit from TD Ameritrade means the RIA custody business lost its most visible corporate-paid advocate -- for the moment

TD's now ex-managing director of advisor advocacy is set to become the FPA president, but most peers agree the 58-year-old is poised to 'write his ticket' with another custodian or national RIA

August 5, 2020 – 9:33 PM

See more related moves

Mentioned in this article:

TD Ameritrade
Asset Custodian
Top Executive: Tom Nally

Bill Winterberg

Bill Winterberg

June 13, 2014 — 6:03 PM

I’m pleased see that this information is being disclosed by TD Ameritrade Holding Corporation.

From a technology perspective, financial advisors have more options today than ever before to seek bid/ask quotes in real time and route trade orders accordingly to market destinations.

This technology helps registered advisors better satisfy their best execution obligation to their investor clients.

Nevertheless, institutions often do assess “trade-away fees” that were highlighted here at RIABiz in November 2013. Advisors must carefully consider the necessity and/or purpose of the trade-away fees charged by institutions.


The war aggainst the savers and working people

The war aggainst the savers and working people

June 14, 2014 — 1:19 AM

The system is flexible and whoever bribes the most wins our orders!

The war aggainst the savers and working people

The war aggainst the savers and working people

June 14, 2014 — 1:16 AM

Ouch, looks like Schwab will get clipped next. All these brokers are too rich, and should not be getting paid for access.

RIABiz Directory

The Industry Sourcebook for RIAs

   |    LISTING

RIABiz Directory sponsored by:

Directory Sponsor Logo