To understand the relationship between execution quality and PFOF, think of a dial. The more the dial is turned to the left, the more revenue your online brokerage generates off PFOF, and the less benefit your trade receives. Turn the dial to the right and your broker makes less money off PFOF, resulting in price improvement for you (better execution). Going back to those fancy SEC 606 reports, there is no way to know exactly how each broker’s dial is set. As stated earlier, the reports are outdated and lack universal metrics that allow for direct peer-to-peer comparisons. However, they do require each broker to disclose any PFOF relationship they have with a market maker. They also require each broker to disclose what percentage of clients’ orders, sorted by type, are routed to each market maker. Using this information, one can take an educated guess (and I mean a guess) as to how each broker has their dial set. Our opinion as to how each broker’s dial is set is an important component of our rating system for order execution quality (see below for ranking methodology and results).