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Beware of Order Routing on these New "App" Brokerages

 
Anonymous Coward
User ID: 78625468
United States
02/16/2021 01:48 PM
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Beware of Order Routing on these New "App" Brokerages
I have an account with a traditional brokerage that lets me see the market depth and lets me specify what exchanges to place my order on. When I place my order, I see it post directly on the exchange. I use a strange number of shares so I know that order is mine. When the price moves in my direction and my bid goes to the front of the line, it soon executes.

I recently signed up for a promo on one of these "app" brokerages, one of the many that popped up in the last few years targeting young people and their smartdumbphones. I went through all the settings and found nowhere to specify order routing and nowhere to see market depth. I placed a buy order with a strange number of shares and went back to my tradititional brokerage to see if the order shows up in the bid/ask depth. Nothing. I see the bid move to my order price, and even below it, yet no execution. Nothing. Eventually the price moves back up away from my order and it didn't execute.

I've done this experiment multiple times, and my traditional brokerage always gives me better execution, according to the actual market, and sometimes even gives me better-than-spread priced executions. I've gotten sell orders executed above the entire day's range and buy orders executed below the entire day's range.

In the "app" brokerages, the orders won't execute unless the price moves past the order price definitively, and even then, who knows. I once placed an order at night for the the next day. The next day, it never executed, despite the order price being within the day's price range.
Weyoun  (OP)

User ID: 78625468
United States
02/18/2021 12:55 PM
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Re: Beware of Order Routing on these New "App" Brokerages
I placed two buy orders, one in "app" brokerage and one in traditional brokerage. Same equity, same share amount, same price. Except, i placed the "app" one earlier, like 20 minutes earlier. The price eventually went down, touched my order price, and went back up. You would expect the "app" order, placed earlier, to trigger first right? Nope, the traditional brokerage order triggered first. The "app" one never did. The price moved back up and the "app" order, placed earlier, is still sitting there unexecuted.
Anonymous Coward
User ID: 80050376
United Kingdom
02/18/2021 12:58 PM
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Re: Beware of Order Routing on these New "App" Brokerages
Hi Op, interesting thread, thank you. Could you list as many of these platforms as you can for me please? Not the largest ones, the small and medium sized ones. Cheeky to ask but I have started working for a payments comp0any and these platforms are one of the target markets I've been assigned to understand. You'd be saving me a shit load of time.

Thanks in advance mate.
Pukeko

User ID: 73782873
United States
02/18/2021 01:00 PM
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Re: Beware of Order Routing on these New "App" Brokerages
Thanks for confirming what I suspected
Weyoun  (OP)

User ID: 78625468
United States
02/18/2021 01:14 PM
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Re: Beware of Order Routing on these New "App" Brokerages
Hi Op, interesting thread, thank you. Could you list as many of these platforms as you can for me please? Not the largest ones, the small and medium sized ones. Cheeky to ask but I have started working for a payments comp0any and these platforms are one of the target markets I've been assigned to understand. You'd be saving me a shit load of time.

Thanks in advance mate.
 Quoting: Anonymous Coward 80050376


Go to any mainstream website that has a finance or market news section, disable your ad blockers, and you'll see these new "app" brokerages advertising all over the place.

They are supposeldy "free." No fees. But how do they get the money to operate and run so many ads and so many promos? When something is "free", it's becuase the user base is the product. They route the orders to who-knows-where so their real customers, big money, who pay for the orders to be routed to them, front-run the orders.
Anonymous Coward
User ID: 80050376
United Kingdom
02/18/2021 01:38 PM
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Re: Beware of Order Routing on these New "App" Brokerages
Thanks mate, I'm in Blighty so if you can think of any UK/European "mainstream" sites I should look at then please let me know.

Really appreciate the reply!





GLP