I am a small retail investor, and I have an account at a zero-commission stock broker. The stock brokerage firm offers "direct routing", where I can choose to send my order to a specific trading venue. Two electronic communication networks (ECNs) are available:


I have always used automatic order routing ("smart order routing"), where I do not need select any specific stock exchange. From my understanding of stock markets, some direct market access (DMA) traders select specific trading venues to capture rebates paid by those trading venues when adding or removing liquidity. Given that my stock broker does not give me a portion of the ECN rebates when I add or remove liquidity, is there any use in routing my orders to specific trading venues?

I am not familiar with this area of stock trading, but my guess is that different ECNs have different order features such as different complex orders, hidden orders, partially-hidden orders (ability to adjust the number of shares displayed), etc. I would appreciate it if someone could elaborate on the practical uses of direct routing for retail investors.

1 Answer 1


I think that "direct routing" to a specific ECN is more applicable for a trader who wants better chance at getting a fill for a larger order.

Suppose you want to buy 5,000 shares and it's available on ARCA. However, a broker like Robinhood routes to ECNs where Virtu and Citadel are offering them payment for order flow. Say the shares available there might be 500 or 1,000. Therefore, they don't have the liquidity for a fill. So direct routing to ARCA would get you full 5,000 fill, avoiding the possibility that the market moves away from you before getting all 5,000 shares with the first stop at the PFOF ECN and then secondary routing to ARCA.

I think that Smart Routing is more than adequate for small traders, beginner traders as well as investors. I'm a retail trader so I'm no authority on this. Perhaps the pros have better reasons for routing but for me, time is money. If I want a position or an exit, the time spent looking at what ECN has shares isn't worth the chance of missing the fill. And this applies even more for me for illiquid stocks.

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