The Fidelity-Citadel PFOF Relationship
Fidelity is notable as the largest discount broker that does NOT accept PFOF for equity orders. Fidelity routes equity orders directly to exchanges or uses price improvement mechanisms that do not involve PFOF payments. This makes Fidelity a comparison case for demonstrating that large-scale discount brokerage can operate without PFOF — and that the practice is a choice, not a necessity.
The Financial Scale
In n/a, Fidelity received minimal in payment for order flow. This payment came primarily from Citadel Securities in exchange for routing Fidelity customers' equity orders to Citadel for execution. Citadel paid this amount because it expected to extract significantly more value from executing Fidelity's customers' orders — through spread capture — than it paid for the order flow. The difference represents value extracted from Fidelity customers through execution quality degradation.
Regulatory Actions
N/A — Fidelity does not accept PFOF for equity orders. This is the correct model.
What Fidelity Customers Should Know
Fidelity customers can find out how their orders are routed by accessing the broker's SEC Rule 606 quarterly report, typically available in the "Legal Disclosures" or "About" section of the broker's website. For investors concerned about PFOF, alternative brokers that route to exchanges directly — including Fidelity (for equity orders) and Interactive Brokers (with direct routing option) — are available.