tastytrade, Inc has agreed to pay a fine of $850,000 as a part of a settlement with the Financial Industry Regulatory Authority (FINRA).

From January 2020 to January 2023, tastytrade failed to conduct reasonable regular and rigorous reviews to ensure its customers’ equities orders obtained best execution. During this period, the firm routed all customer equity orders exclusively to five market makers that paid for order flow.

However, the firm failed to compare the execution quality of its routing arrangements to the execution quality available from competing markets to which it did not route orders.

Additionally, the firm failed to review all relevant execution quality factors, including price disimprovement, and failed to review orders on a type-of order basis.

As a result, tastytrade violated FINRA Rules 5310(a), 5310 Supplemental Material .09 (Rule 5310.09), and 2010.

During this same period, tastytrade violated FINRA Rules 3110 and 2010 by failing to establish and maintain a supervisory system, including written supervisory procedures (WSPs), reasonably designed to achieve compliance with its best execution obligations.

The firm has agreed to a censure in addition to the fine of $850,000.

tastytrade has been a FINRA member since March 2016. In February 2023, the firm changed its name from tastyworks, Inc. to tastytrade, Inc. Headquartered in Chicago, Illinois, the firm employs over 80 registered representatives in its one office. Tastytrade provides brokerage and trading, execution, and, through an unaffiliated clearing broker, clearing services to self-directed retail customers through its app and website portal.