新利18线上娱|新利18老版本

External Partners Alumni Search Submit Return to home Search Search About About Olin Home Why Olin Equity, Diversity & Inclusion Leadership & Strategy News & Media Events Contact Us Programs Programs Home Explore Our Programs BS in Business Administration MBAs Specialized Master's Doctoral Executive Education Dual Degrees Faculty & Research Faculty & Research Home Faculty Directory Research Research Centers Olin Brookings Commission Olin Award Student Resources Student Resources Home Career Services Center for Experiential Learning Entrepreneurship Academic Calendars Student Organizations For Current Students For Military Veterans Admissions Admissions Home Scholarships & Aid Attend Program Events Visit Olin Ask a Student Student Profiles Request Information Refer a Candidate External Partners Alumni Study finds ‘astonishing’ differences in brokers’ pricing of stock trades October 18, 2022 By Jill Young Miller 3 minute read Home News Study finds ‘astonishing’ differences in brokers’ pricing of stock trades A new&＃160;study&＃160;finds wide disparities in the prices investors pay when buying and selling stocks through six popular brokerages.&＃160; TD Ameritrade&＃160;delivered the best prices, and Fidelity Investments,&＃160;E*Trade&＃160;and&＃160;Robinhood Markets&＃160;Inc.&＃160;followed. Two trading platforms from&＃160;Interactive Brokers Group&＃160;Inc. came in at the bottom. The experiment &＃8220;reveals an astonishing dispersion in the quality of price execution across our sample of six brokerage accounts,&＃8221; the authors write. They found the costs incurred in a transaction ranged from -0.07 to -0.46%, excluding any commissions.&＃160;The average&＃160;price improvement&＃160;varied from 3 to 8 cents a share, which may not sound like much until you consider how many millions of trades people make daily. 14 million trades a day The five brokers&＃8217; daily trading volume is 14 million daily trades, or 3.6 billion a year. The average retail trade of $8,000 translates into $28 trillion traded annually. So, for every one basis point of price execution difference, the annual cost to retail traders is $2.8 billion, according to the research. &＃8220;In that context, our observed execution differences are economically very large,&＃8221; the authors say in their working paper, &＃8220;The &＃8216;Actual Retail Price&＃8217; of Equity Trades.&＃8221; &＃8220;While we were aware that such trading would not be &＃8216;free,&＃8217; we were surprised by the range of execution prices for our simultaneous identical trades.&＃8221; Huang The researchers, including Olin Assistant Professor of Finance&＃160;Xing Huang, bought and sold stocks 85,000 times over nearly six months. At the peak, their trades numbered more than 1,000 a day. They tried to place the same trades simultaneously with different brokers and measured the prices they got. &＃8220;Consumers should realize that zero commission doesn&＃8217;t mean free trading, and the transaction costs could vary across brokers,&＃8221; Huang said. &＃8220;Although we show that the differences are economically large on the aggregate level, the differences may be small on the individual level. While some consumers may be more concerned about other features of brokers, consumers who care about execution prices may be interested in our results.&＃8221; Different prices for the same trades According to the research results, the price dispersion is because off-exchange wholesalers give different execution prices to brokers for the same trades. &＃8220;The difference in execution costs between these different brokers is huge, and nobody knows it,&＃8221; Schwarz said. Said Huang, &＃8220;We were quite surprised by off-exchange wholesalers systematically give different execution prices to different brokers, even for the same trades.&＃8221; The findings indicate that the current disclosure regime is inadequate and provides limited information regarding the quality of price across brokers. &＃8220;In practice,&＃8221; the authors write, &＃8220;it is very hard to compare the actual retail price execution quality of different brokers.&＃8221; The researchers spent their own money on the experiment, and they lost about $23,000 doing the trades, lead author Christopher Schwarz, of the University of California at Irvine, told&＃160;The Wall Street Journal&＃160;in a September 16&＃160;article. Their impression was that they couldn&＃8217;t use their research accounts since the experiment involved trading and uncertain outcomes, Huang said. &＃8220;We did not want to get any funding from institutions because we didn&＃8217;t want any potential conflicts of interest compromise our independent opinion.&＃8221; About the Author Jill Young Miller As research translator for WashU Olin Business School, my job is to highlight professors’ research by “translating” their work into stories. Before coming to Olin, I was a communications specialist at WashU’s Brown School. My background is mostly in newspapers including as a journalist for Missouri Lawyers Media, the Atlanta Journal-Constitution, The Washington Post and the Sun-Sentinel in South Florida. Contact Us For assistance in finding faculty experts, please contact Washington University Public Affairs. 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