What's E*Trade Doing With Its Customers' Orders Anyway?

The baby in the eTrade commercials, McAllister Kerr, at home in Oakville, Ontario, Canada. Photograph by Keith Beaty/Toronto Star via Getty Images

Buried in an otherwise mundane regulatory report that E*Trade Financial filed on Tuesday, all the way down on page 98, was an interesting bit of news: The Financial Regulatory Authority (Finra) is investigating the discount brokerage for how it prices and routes its customers’ stock orders. Specifically, Finra is examining the orders that E*trade effectively sends to itself. First, a primer on how this works:

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