Stock, ETF, and options order routing | Robinhood

Stock, ETF, and options order routing

When you buy or sell stocks, ETFs, and options with Robinhood, we mostly send your orders to market makers that typically offer better prices than public exchanges.

To compete with exchanges, the market makers, with whom we have relationships, offer rebates to brokerages like ours. Rebates are one of a few other revenue streams that make it possible for us to provide a range of financial products and services at a low cost.

We also route a small portion of orders in stocks and ETFs to an exchange, taking into account the quality of past executions. This preserves the ability to maintain trading in case one or more market makers are unable to execute orders. Under applicable exchange fee schedules, we would generally pay the exchange when we take liquidity and are paid when we provide liquidity.

What's order routing?

Order routing is the process of sending your order to a market maker or directly to an exchange.

What's a market maker?

A market maker is a third-party institution that typically acts as a liquidity provider and executes orders.

Example

Let’s say you want to buy one share of MEOW. To do so, you’d place a buy order in the app. Our order routing system uses an algorithm that would send your order to a market maker or exchange, based on historical performance.

Which market makers get the orders?

We have relationships with several market makers, and our routing system is designed to automatically send most orders to the market makers that are likely to give you the best execution, based on historical performance.

The routing system also sends a small portion of orders to an exchange, taking into account the quality of past executions. This helps maintain trading if one or more market makers are unable to execute orders.

How’s execution quality maintained?

We pursue execution quality by striving for the best price that’s reasonably available for the orders you place.

The majority of our orders are filled at the National Best Bid and Offer (NBBO) or better, which means most customers are, at a minimum, receiving the best publicly available bid or ask price. We also perform regular, rigorous reviews of the execution quality our customers receive, looking at factors like execution price, speed, and price improvement.

See execution quality to learn more.

Consistent with SEC Rule 606, we disclose our routing practices and other relevant information required by SEC Rule 606(a) in the SEC Rule 606 and 607 Disclosure Statements in our Disclosure Library.

Is order routing incentivized through specific market makers?

No. All market makers with whom we have relationships pay us rebates at the same rate, which means we aren’t incentivized to send orders to any one specific market maker.

How are rebates calculated?

We earn a percentage of the bid/ask spread, or the difference between the highest price to buy (bid) and the lowest price to sell (ask) the equity, at the time of execution. The spread is determined by the NBBO.

Are my orders shared with anyone other than the market maker or exchange?

No. We don't share your order information with anyone before we send orders to market makers or exchanges.

Was this article helpful?
Reference No. 3149561
Still have questions? Contact Robinhood Support
PARTICIPATION IS POWER™

All investing involves risk.

Brokerage services are offered through Robinhood Financial LLC, (“RHF”) a registered broker-dealer (member SIPC) and clearing services through Robinhood Securities, LLC, (“RHS”) a registered broker dealer (member SIPC). Cryptocurrency services are offered through Robinhood Crypto, LLC (“RHC”) (NMLS ID: 1702840). Review a list of RHC licenses for more information.The Robinhood Money spending account is offered through Robinhood Money, LLC (“RHY”) (NMLS ID: 1990968), a licensed money transmitter. Review a list of our licenses for more information. Credit card products are offered by Robinhood Credit, Inc. ("RCT") (NMLS ID: 1781911 and issued by Coastal Community Bank, Member FDIC, pursuant to a license from Visa U.S.A. Inc.

The Robinhood Cash Card is a prepaid card issued by Sutton Bank, Member FDIC, pursuant to a license from Mastercard® International Incorporated. Mastercard and the circles design are registered trademarks of Mastercard International Incorporated.

RHF, RHY, RHC, RCT, and RHS are affiliated entities and wholly owned subsidiaries of Robinhood Markets, Inc. RHF, RHY, RHC, RCT, and RHS are not banks. Products offered by RHF are not FDIC insured and involve risk, including possible loss of principal. RHC isn’t a member of FINRA and accounts are not FDIC insured or protected by SIPC.

RHY is not a member of FINRA, and products are not subject to SIPC protection, but funds held in the Robinhood spending account and Robinhood Cash Card account may be eligible for FDIC pass-through insurance (review the Robinhood Cash Card Agreement and the Robinhood Spending Account Agreement).

Options trading entails significant risk and is not appropriate for all customers. Customers must read and understand the Characteristics and Risks of Standardized Options before engaging in any options trading strategies. Options transactions are often complex and may involve the potential of losing the entire investment in a relatively short period of time. Certain complex options strategies carry additional risk, including the potential for losses that may exceed the original investment amount.

Commission-free trading of stocks, ETFs and options refers to $0 commissions for Robinhood Financial self-directed individual cash or margin brokerage accounts that trade U.S. listed securities and certain OTC securities electronically. Keep in mind, other fees such as trading (non-commission) fees, Gold subscription fees, wire transfer fees, and paper statement fees may apply to your brokerage account. Please see Robinhood Financial's Fee Schedule to learn more.

Robinhood, 85 Willow Road, Menlo Park, CA 94025.© 2024 Robinhood. All rights reserved.
Follow us on

All investing involves risk.

Brokerage services are offered through Robinhood Financial LLC, (“RHF”) a registered broker-dealer (member SIPC) and clearing services through Robinhood Securities, LLC, (“RHS”) a registered broker dealer (member SIPC). Cryptocurrency services are offered through Robinhood Crypto, LLC (“RHC”) (NMLS ID: 1702840). Review a list of RHC licenses for more information.The Robinhood Money spending account is offered through Robinhood Money, LLC (“RHY”) (NMLS ID: 1990968), a licensed money transmitter. Review a list of our licenses for more information. Credit card products are offered by Robinhood Credit, Inc. ("RCT") (NMLS ID: 1781911 and issued by Coastal Community Bank, Member FDIC, pursuant to a license from Visa U.S.A. Inc.

The Robinhood Cash Card is a prepaid card issued by Sutton Bank, Member FDIC, pursuant to a license from Mastercard® International Incorporated. Mastercard and the circles design are registered trademarks of Mastercard International Incorporated.

RHF, RHY, RHC, RCT, and RHS are affiliated entities and wholly owned subsidiaries of Robinhood Markets, Inc. RHF, RHY, RHC, RCT, and RHS are not banks. Products offered by RHF are not FDIC insured and involve risk, including possible loss of principal. RHC isn’t a member of FINRA and accounts are not FDIC insured or protected by SIPC.

RHY is not a member of FINRA, and products are not subject to SIPC protection, but funds held in the Robinhood spending account and Robinhood Cash Card account may be eligible for FDIC pass-through insurance (review the Robinhood Cash Card Agreement and the Robinhood Spending Account Agreement).

Options trading entails significant risk and is not appropriate for all customers. Customers must read and understand the Characteristics and Risks of Standardized Options before engaging in any options trading strategies. Options transactions are often complex and may involve the potential of losing the entire investment in a relatively short period of time. Certain complex options strategies carry additional risk, including the potential for losses that may exceed the original investment amount.

Commission-free trading of stocks, ETFs and options refers to $0 commissions for Robinhood Financial self-directed individual cash or margin brokerage accounts that trade U.S. listed securities and certain OTC securities electronically. Keep in mind, other fees such as trading (non-commission) fees, Gold subscription fees, wire transfer fees, and paper statement fees may apply to your brokerage account. Please see Robinhood Financial's Fee Schedule to learn more.

Robinhood, 85 Willow Road, Menlo Park, CA 94025.© 2024 Robinhood. All rights reserved.