• Print
  • Default text size A
  • Larger text size A
  • Largest text size A

Commitment to Execution Quality

Fidelity’s order-flow management team ensures that your order goes to the best-performing market centers, giving you a consistent trading experience.

Fidelity's unique approach

To ensure our high standards are met, Fidelity's order-flow management team has established policies and procedures to:

  • Supervise order-flow routing activities.
  • Define execution quality measures, which play a role in determining where orders are routed.
  • Monitor and evaluate competing market centers for order handling and execution quality.
  • Identify and qualify orders executed outside the National Best Bid or Offer (NBBO).
  • Take corrective action for failure to meet our execution quality standards.

Performance and value

1-Second Execution Guarantee
Learn more about how we ensure that qualifying market orders are executed at the NBBO in 1 second or less, or they are commission-free.

Compare us to your online broker
Our commitment to execution quality, alongside some of the lowest online rates, are among the reasons why Fidelity remains an industry leader.

What defines execution quality?

Percentage of shares that fall within the NBBO: 95.3%

Q4 2014

How it’s measured: Percentage of shares executed at or within the National Best Bid or Offer (NBBO), which is a consolidated quote representing the highest bid and lowest offer for a security across all exchanges and/or market makers. It is updated continuously during market hours.

Fidelity Q3 2014 and Q4 2014 Statistics on Execution Price

Month Overall listed Overall NASDAQ
December 2014 96.2% 94.3%
November 2014 96.3% 95.2%
October  2014 95.0% 93.6%
September 2014 96.8% 94.3%
August 2014 96.7% 95.5%
July 2014 96.6% 95.0%

Dollar value of price improvement

Why it's important: Many brokerage firms will display the percentage of shares that are price improved without showing additional detail. However, the average dollar price improvement, which shows the actual savings per order, is worth a closer look.

The dollar value of shares that are price improved is determined by comparing the execution price to the National Best Bid (NBB), if you are selling, or National Best Offer (NBO), if you are buying, at the time of the trade; multiplied by the number of shares executed. The dollar value price improvement is the overall monetary improvement of executed orders, taking into account orders that are executed better and worse than the NBBO.

Fidelity Price Improvement vs. Industry Average* for Period Between January 1, 2014 and December 31, 2014

Order size
Fidelity average Industry average
100 Shares $1.144 $0.128
1,000 Shares $8.398 $1.297
*Based on data from CoreOne Technologies for SEC Rule 605 eligible orders executed at Fidelity between September 1, 2013 and August 31, 2014. The comparison is based on an analysis of price statistics that include marketable orders: market orders and limit orders at the National Best Bid and offer (NBBO), between 100 – 1,999 shares, excluding orders with special handling instructions and order sizes greater than 2,000 shares. A data range of 100 – 499 shares is used for the 100 shares order size and a data range of 100 – 1,999 shares is used for the 1,000 shares order size. Average price improvement for order sizes outside of these data ranges will vary. Fidelity's average retail order size for SEC Rule 605 eligible orders during this time period was 431 shares, or 826 shares when including block trades. Price improvement examples are based on averages and any price improvement amounts related to your trades will depend on the particulars of your specific trade.

If you compared Fidelity's Average price improvement to the Industry Average on a typical Fidelity 1,000 share equity market order above, and applied the $8.39 difference against Fidelity's online commission rate of $7.95, you would have essentially paid a zero commission to trade.

Percentage of shares that are price-improved: 84.2%

Q4 2014

How it's measured: Percentage of shares executed at prices better than the prevailing National Best Bid or Offer (NBBO), i.e., either below the best offer for buys or above the best bid for sells.

Fidelity Q3 2014 and Q4 2014 Statistics on Price Improvement

Month Overall listed Overall NASDAQ
December 2014 85.8% 81.9%
November 2014 85.9% 82.9%
October 2014 84.4% 81.1%
September 2014 87.5% 82.4%
August 2014 87.4% 84.0%
July 2014 85.9% 83.2%

Average execution speed: 0.21 of a second

Q4 2014

How it's measured: Average period between the time Fidelity receives an order and the time of order execution.

NFS NASDAQ

Execution speed: percentage of shares
Q4 2014


National Financial Services (NFS) is an affiliated broker-dealer of Fidelity Brokerage Services.

NFS Listed

Execution speed: percentage of shares
Q4 2014

 execution_speed_t2
National Financial Services (NFS) is an affiliated broker-dealer of Fidelity Brokerage Services.

Average effective spread: $0.0097

Q4 2014

How it's measured: The distance from the midpoint of the market at the time when your order is entered to the execution price you receive. This value is doubled to capture the whole bid/offer spread. This amount captures both how often, and by how much, a broker-dealer improves the price of a share.

Overall NASDAQ

Overall Listed


Example: A stock is quoted with a bid of $10.00 and an ask of $10.04 at the time your order is entered. The quoted spread is $0.04. The midpoint price is $10.02 and your buy order is executed at $10.03. The difference between the midpoint ($10.02) and your execution price ($10.03) is $0.01. This value is doubled, so the effective spread on your order is $0.02. The lower the effective spread value, the better. Effective spread calculates how much above the midpoint price you paid on a buy order and how much below the midpoint price you received on a sell order.


SEC Rule 605

The SEC's customer disclosure rule, SEC Rule 605, requires market centers to disclose monthly data about the quality of their trade executions. Each monthly report will disclose execution-quality data based on the previous month's trading activity.

Pursuant to the "Joint Industry Plan, Order Approving Plan Establishing Procedures Under Rule 605 by American Stock Exchange, Boston Stock Exchange, Chicago Stock Exchange, Cincinnati Stock Exchange, National Association of Securities Dealers, New York Stock Exchange, Pacific Exchange, and Philadelphia Stock Exchange" (Joint Industry Plan) the execution-quality data provided in the reports must be in a standard format.

Report for Fidelity's market centers
SEC Rule 605 monthly data

More information
SEC's Joint Industry Plan
Financial Industry Regulatory Authority (FINRA): SEC Rule 605
Quality measurement definitions (PDF)

SEC Rule 606

Under SEC Rule 606, broker-dealers that route orders on behalf of customers are required to prepare quarterly reports that disclose the following information:

  • The percentage of total customer orders that were nondirected orders, and the percentages of total nondirected orders (defined as any order that a customer has not specifically instructed to be routed to a particular venue for execution) that were market orders, limit orders, or other orders
  • The identity of the venues to which a significant percentage of total nondirected orders were routed for execution
  • The percentage of total nondirected orders routed to the venue, and the percentages of total nondirected market orders, nondirected limit orders, and nondirected other orders that were routed to the venue
  • Terms of the material aspects of the broker-dealer's relationship with each venue identified above, including a description of any arrangement for payment for order flow and any profit-sharing relationship

The reports are to be made public for each calendar quarter and published no later than one month after the end of the quarter. Another section of this rule requires annual public notification that this information is available.

Read the Fidelity SEC Rule 606 report for this quarter (PDF).

Pursuant to the rule, customers can request details on the identity of the venue, time of execution, and whether the order was directed to a specific venue per customer request in the six months prior to the request. Through a Fidelity representative, a customer may also request up to six months of this information in hard copy on all orders for a specific time period and/or on individual securities. The collection period for this information began on July 2, 2001. This information is available online although it is not required by SEC rules.

close

execution price

the value per share at which a trade filled; for equities or options, if a trade receives multiple executions, the execution price is displayed as a weighted average; the weighted average is the total dollar value of the trade divided by the number of shares traded

Questions?

Get our free mobile app

Keep up with the changing markets, research, trade, & more, wherever you are.

Executions represent SEC Rule 605 eligible market orders between 100‐1,999 shares executed as agent through third-party market makers and listed exchanges and as principal by NFS-affiliated desks. Analysis includes only those exchanges or market makers receiving at least 2% of Fidelity Brokerage Services, LLC monthly NASDAQ and Listed share volume. Source: CoreOne Technologies

System availability and response times may be subject to market conditions.

433964.22.0