Scottrade Trade Quality and Execution

Trading Execution

Scottrade monitors the execution quality of all the trading centers to assess whether the trading center is providing our customers best execution*. Scottrade uses various monitoring methods. These methods include a daily order-by-order exception report analysis. They also include a post trade date regular and rigorous review of execution quality. We perform this regular and rigorous review by analyzing statistics from Thomson Transaction Analytics and by reviewing the output of our proprietary patent-pending algorithm, the Scottrade Best-Execution Index or SBI™.

* defined in SEC rule 605

Scottrade Best-Execution Index (SBI)*

As part of Scottrade's regular and rigorous review of execution quality, we developed a proprietary algorithm – the Scottrade Best-Execution Index (SBI), for evaluating execution quality on a stock-by-stock basis over a period of time**. The SBI is an index value that is used to compare the execution quality of market centers utilized by Scottrade to other market centers. The SBI is intended to be an analytical tool for identifying under-performing market centers, not for identifying the best execution quality or guaranteeing an execution's time or price.

The SBI is composed of the following equally weighted components:

Speed of Execution
Price improvement percentage and cent improvement
At the quote or better percentage
Outside the quote percentage and cent disimprovement
Effective spread

If a market center is under-performing, Scottrade will seek opportunities to route orders in those securities to a better performing market center.

**The SBI analyzes data from the most recent month and the previous two months.

*The Scottrade Best-Execution Index is a proprietary algorithm for evaluating execution quality on a stock-by-stock basis. The SBI is utilized by Scottrade to compare the execution quality of market centers utilized by Scottrade to other market centers in order to seek opportunities for better performing market centers. The SBI is intended to be an analytical tool for identifying under-performing market centers, not for identifying the best execution quality. The SBI does not imply or guarantee superior execution quality or an execution's time or price.

Information is based on analysis from Thomson Transaction Analytics. Thomson Transaction Analytics is not affiliated with Scottrade. The information does not include pre-market or after-hours orders or orders received during locked or crossed markets. It does include markets received during fast market conditions. Scottrade updates the information on a monthly basis.

You will always receive the price at which your order was executed at the trading center even though the execution report that Scottrade receives may be delayed (or �late�) from the trading center. A �late report� refers to when Scottrade does not receive a timely execution report from a trading center.

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Any specific securities, or types of securities, used as examples are for demonstration purposes only. No information on this web site should be considered a recommendation or solicitation to invest in, or liquidate, a particular security or type of security.

Investors should consider the investment objectives, risks, charges and expenses of a mutual fund carefully before investing. A mutual fund's prospectus contains this and other information about the mutual fund. Prospectuses are available through our trading site or through a Scottrade branch office. The prospectus should be read carefully before investing. No transaction fee (NTF) funds are subject to the terms and conditions of the NTF funds program. Scottrade is compensated by the funds participating in the NTF program through recordkeeping, shareholder, or SEC 12b-1 fees.

Investors should consider the investment objectives, risks, charges, and expenses of an Exchange-Traded Fund (ETF) carefully before investing. A prospectus contains this and other information about the ETF can be obtained from the issuer. The prospectus should be read carefully before investing.

Margin trading involves interest charges and risks, including the potential to lose more than deposited or the need to deposit additional collateral in a falling market. The Margin Disclosure Statement and Agreement (PDF) is available for download, or it is available at one of our branch offices. It contains information on our lending policies, interest charges, and the risks associated with margin accounts.

Options are not appropriate for all investors. Detailed information on our policies and the risks associated with options can be found in Scottrade's Options Application and Agreement, Brokerage Account Agreement, and Characteristics and Risks of Standardized Options (also available at one of our branch offices). All option accounts require prior approval by Scottrade.

Online market and limit equity orders are just $7 for stocks over $1.

Market volatility, volume, and system availability may impact account access and trade execution.

Testimonials may not be representative of the experience of other clients and are no guarantee of future performance or success.