Financial Information Forum Members Release Retail Execution Quality Statistics

The Financial Information Forum (FIF) is launching a program to provide retail investors with more visibility into execution quality measures. Through the new program, broker-dealers will voluntarily publish standardized statistics that will measure the quality of trade executions on retail investor orders in exchange-listed stocks. Several FIF member firms have agreed to produce a report each quarter that is meaningful and understandable to retail investors.

“This initiative is significant because it will demonstrate to retail investors the attention and care that is placed on execution quality across the industry,” said Mary Lou Von Kaenel, Managing Director of FIF.

Current Securities and Exchange Commission rules require executing broker-dealers to make “605/606 Reports” available to investors; however, these reports do not provide the level of information that allows a retail investor to gauge how well a broker-dealer typically fills a retail order when compared to the “national best bid or offer” (NBBO) at the time the order was received by the executing broker-dealer. In order to better provide investors with execution quality measures, and to aid in their understanding of the statistics included in these new reports, participating firms are also providing a definition of terms and a standard set of Frequently Asked Questions that explain the meaning of each metric.

Each participating firm will publish the following metrics of their retail trade executions in exchange-listed stocks, grouped by various order size ranges:

• Average size of orders, in shares, within each range
• Percent of shares in market orders that were executed at current market quote or better
• Percent of shares in market orders that received price improvement
• Savings received on an average order as a result of price improvement
• Average execution speed, in seconds, between order routing and trade execution