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 will instead be routing our orders to exchanges.
Will this impact the price I pay for stocks?
No. 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 hit the "+" sign until you reach the tip amount you want, 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 5% 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 not connected to the execution 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
Adding a tip to an order on Public is fully optional and is a charge to the Member’s account separate from the execution of orders.
The customer’s decision to tip or not to tip does not impact the order routing, execution, or any other aspect of the order.
Tips are submitted as a dollar amount and are deducted from buying power immediately.
Tips are only charged on executed orders. Tips remain deducted from buying power are held in the member’s account as “pending tips” until they are deducted from the member’s account. . Pending tips will be visible in the member's account detail and are deducted on a regular basis. Once deducted, they will be removed from the account detail and will appear in the account's transaction history.
In the event that a tip is applied to an order that is subsequently canceled, rejected, or reversed, the tip will be credited back to the account.
Tips will never be charged in excess of available buying power
Once a tip is submitted, it cannot be changed.
Tips are capped at 5% of the projected transaction amount.
The tip amount increments are set by the app and tips cannot be made in amounts that do not conform to the pre-set increments.
Tips do not constitute a commission for trading and are not associated with transaction execution therefore they are not included in cost basis or tax lot reporting, and do not reduce tax liability on any transaction
Tips are a charge received by Open to the Public Investing Inc and constitute revenue to the firm. They are not received by nor constitute a gift to any person, principal, proprietor, employee, agent or representative of another person.
Tips will appear on your account statement after they have been deducted from your account, under the description "Tip". Tips are not associated with trade execution and will not appear on trade confirms.
All tipping terms and conditions are subject to change without notice.