The TD Ameritrade-Citadel PFOF Relationship
TD Ameritrade, before its acquisition by Charles Schwab, was one of the largest PFOF recipients. Citadel Securities was TD Ameritrade's primary wholesale market maker. Schwab's acquisition of TD Ameritrade in 2020 merged two major PFOF-dependent brokers, creating a combined entity that continues to route significant order flow to Citadel.
The Financial Scale
In 2019-2020, TD Ameritrade received hundreds of millions in payment for order flow. This payment came primarily from Citadel Securities in exchange for routing TD Ameritrade customers' equity orders to Citadel for execution. Citadel paid this amount because it expected to extract significantly more value from executing TD Ameritrade's customers' orders — through spread capture — than it paid for the order flow. The difference represents value extracted from TD Ameritrade customers through execution quality degradation.
Regulatory Actions
No enforcement action specifically related to PFOF. Merger with Schwab completed 2020.
What TD Ameritrade Customers Should Know
TD Ameritrade 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.