To read more about our decision to eliminate Payment for Order Flow and change the way we route orders please check our announcement here.
What is Payment for Order Flow?
We suggest reading more here, but the short version is that most online brokers in the US get paid by market makers to send your trades to them -- and that practice is called Payment for Order Flow. Oftentimes, it's harmless or even beneficial to investors, but most recently it has been abused by some of our competitors -- and it is nearly impossible to know if you are getting a good deal or not, so we're stopping the practice.
Why are you eliminating it?
We hold ourselves to a higher standard of transparency and alignment, and want all of our Members to feel comfortable knowing how we make money.
How is your order routing changing?
Instead of routing order to market makers, we instead route our orders to exchanges and other market centers.
Will this impact the price I pay for stocks?
No, and we attempt to get you the best price on an order-by-order basis which often results in getting better prices than you would if we went directly to market makers. As a FINRA-registered broker-dealer we are required to provide you the best execution we can. You can read more about our execution practices here.
How else do you make money?
Tipping replaces the revenue we would otherwise receive via Payment for Order Flow (PFOF). In addition to tipping, we also make money via interest on cash balances, securities lending, and in the future we may introduce paid subscriptions. You can learn more here.
We are also launching a new feature that allows our Members to add an optional tip after placing any order. Routing our orders to the exchanges is more expensive, and therefore we’re turning what used to be a revenue stream (PFOF) into a cost center -- and we are hoping that will be offset by the optional tipping feature
How does tipping work?
After you submit an order, you'll be given an opportunity to tip. If you choose to tip, you'll select the amount you’d like to tip, then submit the tip. The tip amount will be deducted against your buying power and will be returned to buying power if the order is canceled, rejected, or reversed.
Is tipping required?
Nope! And tipping is totally separate from your order, so it won't change anything about how your order is executed.
How much should I tip?
Whether or not you tip, and how much, is totally up to you. Our minimum tip varies by the dollar value of your order and the maximum tip we accept is approximately 2% of your order amount.
Can I change my tip amount?
Once a tip is submitted with an order, it cannot be changed, though the order itself can still be canceled which would cancel the tip, as well.
Is tipping considered a commission or sales charge for cost basis reporting?
No. Tipping is a separate charge as part of an order. It will not be reflected in the cost basis or tax lot reporting of a position and will not reduce tax liability on any transaction.
Why did you launch tipping?
The short version: because we think it's a better, more transparent, more aligned way to make money (than payment for order flow, which we've stopped accepting)! Read more about that here.
Tipping Terms & Conditions
After you submit an order (to buy or sell a security), you may be prompted to leave a tip for Public.
Leaving a tip for Public is fully optional.
Your decision to tip or not to tip does not impact your order routing, execution, or any other aspect of the order.
Tips are submitted as a dollar amount. Once a tip is submitted, it cannot be changed.
The tip amount increments are set by the app.
If you leave a tip, the tip is immediately deducted from your buying power and is held in your account as a “pending tip.”
Pending tips are visible in your account detail and will be deducted from your account on a regular basis, at which point they will be removed from the account detail and will appear in your tipping history.
If there’s sufficient buying power to execute your order but not to fulfill the tip amount, we will still execute your order. We will take the tip only to the amount of available buying power.
Tips as an Optional Service Charge
Tips do not constitute a commission for trading.
Tips do not constitute a gift to any person, principal, proprietor, employee, agent or representative of another person.
Tips appear on your trade confirms as an “additional fee” associated with the trade.
All tipping terms and conditions are subject to change without notice.