Our Take

Many online brokers have attempted to lure retail investors by broadening their offerings, but Lightspeed and a few others remain niche. Lightspeed supports just a few asset classes, including equities, options, and futures. This narrows down who Lightspeed is suited for. It's best for high-volume, active traders who can benefit from the tiered pricing and afford the $10,000 to $25,000 buy-in.

Company Overview

Lightspeed caters to active day traders, professional traders, trading groups, institutions, and hedge funds that are interested in the equities, options, and futures markets. The company offers several trading platforms, including the flagship Lightspeed Trader, Lightspeed Web & Mobile, and Sterling Trader Pro, a full-featured Level II trading platform with advanced charting.

Other platforms include Sterling VolTrader, an advanced options trading platform previously called LiveVolX, and Eze EMS (formerly RealTick), which is Lightspeed's only platform that supports futures trading. The core of Lightspeed's services is a stable platform with exceptional order execution. The industry-wide push to zero-commission trading has impacted Lightspeed's retail growth, but company representatives say that its core customers and target market understand the value and benefits of the active day trading services and technology it provides. We'll take a deeper look to help you decide if Lightspeed is a fit for your investing needs.

Pros & Cons

Pros Explained

• Advanced trading platforms: Lightspeed offers multiple trading platforms to choose from, including Lightspeed Trader, Sterling VolTrader, Eze EMS, and Web & Mobile. Which best suits you will depend on your preferred trading instruments and features.
• Low costs for high-volume traders: Customers who meet monthly trading volume thresholds qualify for Lightspeed's Active Trader Commission Group pricing. This can run as low as $0.001 per share and $2.50 per trade on equities, $0.20 per options contract, and $1.29 per contract/per side for futures.
• Speedy order router: Lightspeed's order router is exceptionally fast. It uses a proprietary algorithm that's designed to produce the best execution by rotating through different exchanges and routes.

Cons Explained

• High account minimums: The initial funding requirement for Lightspeed Trader accounts is $25,000. The minimum is $10,000 for Lightspeed WebTrader accounts unless you're a pattern day trader (PDT), in which case it's also $25,000.
• High costs for regular traders: Traders who don't meet the volume threshold for discounted commissions pay more: $0.0045 per share or $4.50 per trade for stock and ETF trades, $0.60 per options contract, and $1.29 per contract/per side for futures. Accounts that fall under $15,000 in value will be charged a $25 per month maintenance fee.
• Not suitable for beginners: The high account minimums, high standard commissions, platform fees, and lack of "easy" tools make Lightspeed a less than ideal choice for new investors. Also, the lack of bonds and mutual funds means the broker may not appeal to casual investors looking for a diversified portfolio.

Usability

Lightspeed's website is basic and straightforward to navigate, and you can easily open an account online. You'll create a user name (typically your email address) and password during the account opening process, then choose the trading platform you want to use and select the appropriate account type. Your choices are individual, joint, LLC, corporate, partnership, or IRA. You'll also answer a series of questions to determine your status as a professional or non-professional trader. Lightspeed's downloadable and flagship trading platform, Lightspeed Trader, is designed for active traders, hedge funds, and institutions. It offers direct market access and can be configured so your favorite tools and widgets are always on top. Lightspeed Web/Mobile Trader is more straightforward than the downloadable version. It's suitable for occasional traders. Sterling VolTrader is another platform that's specifically designed for options evaluation and trading. Futures traders use the Eze EMS (formerly RealTick) platform.

Lightspeed's mobile app is available for Android and iOS, but it's less robust than many trading apps out there. It's primarily intended for closing trades. The app supports the same asset classes as the desktop and web platforms. You'll find streaming data, but you can't stream data on multiple devices at the same time. The app comes with other limitations, too. It doesn't offer news, research, or drawing tools. You can only place limit and market orders.

Trading Experience

Lightspeed Trader, the company's flagship trading platform, is intuitive and customizable. Two buttons at the top of the screen make fast work of switching between the equities trading and options trading layouts. It's simple to launch windows for tools like scanners, watchlists, time and sales data, Level II data, risers and fallers, and the short locate feature.  You'll find a limited selection of technical indicators and drawing tools and a decent variety of chart types and time frames. There are numerous order entry options, so you can build your order to your exact specifications. You can choose from dozens of trade defaults and hotkeys to get your orders to the market faster. You can trade equities and options on any of the platforms, but you'll need Eze EMS or efutures, powered by CQG, to trade futures. Options traders might prefer the Sterling VolTrader platform, which is geared toward monitoring risk. All platforms offer streaming real-time data, but only on one device at a time. You'll find Level I quotes on all the platforms and Level II quotes on all but Web & Mobile. You can enter multiple orders simultaneously on Lightspeed Trader, Sterling VolTrader, and Eze EMS, and Eze EMS lets you stage orders for later entry. 

Mobile Trade Experience

The mobile trading platform offers most of the same functionality as Lightspeed Web. It features real-time streaming data and all your account details, but it doesn't have the powerful analytics built into the downloadable platform. You can trade equities and options but not futures on the mobile app.

Range of Offerings

Lightspeed is geared toward active traders, and its platform focuses on stocks, options, and futures. You'll need a separate account to trade futures. The company doesn't offer commission-free ETFs, forex, or mutual funds, and its fixed-income opportunities are limited to T-bills that are traded via a live broker. Fractional shares aren't supported. Investors using Lightspeed can trade the following:

• Stocks long and short (about 6,000 on the easy-to-borrow list for short sales) 
• OTCBB
• Futures/Commodities
• Futures options 
• Simple and multi-leg options (up to four legs)
• T-bills (via a live broker)
• Cryptocurrency

Order Types

All Lightspeed platforms support stop limit orders and trailing stops. The Eze EMS platform, formerly RealTick, supports one-cancels-the-other (OCO) and bracket orders. You can enter "if touched" orders on Lightspeed Trader. The web and mobile platforms are limited in terms of order types. They only allow market and limit orders. You can stage orders for later entry on Eze EMS and enter orders simultaneously on Lightspeed Trader, Sterling Trader Pro, and Eze EMS. It's not possible to select a tax lot before placing a trade. Closed positions default to first-in-first-out (FIFO).

Trading Technology

Lightspeed gives you the option to route your order directly through many different venues, including several dark pools. You can also select Lightspeed's smart order router, "LSPT route," which uses a proprietary algorithm designed to provide the best execution by rotating through different exchanges and routes. It primarily sequences orders using a sequential router, but it occasionally uses spray technology.

Overall, you can expect exceptionally fast order executions. A company spokesperson tells us the order router is primarily geared toward speed of execution, but it also seeks out price improvement. Lightspeed doesn't track price improvement, and the platforms don't support any backtesting or trade automation capabilities.

Costs

Lightspeed offers different commission plans based on trading volume. You may qualify for discounted commissions through its Active Trader Commission Group if you meet monthly trading volume thresholds. You must contact the company to join the program and determine the rate for which you qualify. Per-share rates range from $0.0010 to $0.0045, depending on monthly volume. Per-trade rates fall between $2.50 and $4.50, again depending on how much you trade during the month. Options are similarly tiered. Traders who don't qualify for the Active Trader Commission Group can trade stocks and ETFs for $0.0045 per share with a $1.00 minimum, or $4.50 per trade. Options are $0.60 per contract with a $1 minimum and futures cost $1.29 per side plus exchange fees. These costs assume the standard per-share and per-contract commission rates for Lightspeed Trader or Lightspeed Web Trader:

• The cost to trade one share is $2.50, or $4.50 to trade.
• The OTCBB commission is $10 per transaction with no share cap.
• The options base commission to open and close is $0.
• The options per contract fee is $0.60 with a minimum of $1 per transaction.
• The fee for 50 contracts is $30.
• A covered call trade of 500 shares plus five contracts is $5.25.
• Margin interest on a $0 to $49,000 balance is 12.25%, and it's 10.00% at $1 million.
• Accounts that fall below a $15,000 balance must generate $25 per month in commissions or pay the difference.
• Crypto is now available through Lightspeed Crypto with no transaction fees.
• There's no account closure fee.
• The ACAT out fee is $95.
• The exercise and assignment fee is $20.
• There are no deposit or withdrawal fees.
• Wire fees are $20 for domestic and $50 for international.
• The IRA opening fee is $20, and the IRA annual fee is $35.
• Checks are free except for overnight or Saturday delivery. These are $30 each.
• The price per futures contract open and close is $0.60 per contract per side.
• The software access fee for Lightspeed Trader is $130 per month. It can be reduced based on trading activity.
• ETF trades are commission-free.
• Live broker trading is available for an additional $20 per transaction.
• A paper statement is $5.
• A paper confirmation fee is $2.

How This Broker Makes Money From and for You

Unlike many brokers, Lightspeed hasn't jumped on the zero-commission trend. These are some behind-the-scenes ways that Lightspeed makes money off you and for you:

• Interest paid on cash: Lightspeed earns interest on its customers' uninvested cash, but it doesn't share any of these earnings with account holders.
• Interest charged for margin: Lightspeed's margin interest rates are lower than many other large brokers. You'll pay 12.25% on a $0 to $49,999 balance, and 10.00% on a balance of $1 million or more.
• Stock loan programs: Lightspeed earns money by loaning stocks in your account for short sales, with your permission, of course. It shares that revenue with you. The firm didn't provide us with any details about potential earnings from its stock loan program.
• Payment for order flow: Lightspeed participates in payment for order flow (PFOF), a practice in which brokers accept payments for directing orders to specific market makers.
• Price improvement: Lightspeed didn't disclose its price improvement details.
• Portfolio margining: Lightspeed clients who qualify can apply forportfolio margining, a risk-based method of computing margin requirements. Portfolio margining typically works best for customers who trade derivatives that offset the risk inherent in their equity positions.

Account and Research Amenities

Lightspeed has limited account and research amenities compared to other large brokers.

Stock Screener

Lightscan is Lightspeed's market scanner. It's an integrated market scanning and filtering tool for U.S. equities and options. It has about a dozen customizable criteria, including net change, percentage change, price range, and volume.

ETF and Mutual Fund Screener

Lightspeed doesn't have an ETF-specific screener or a mutual fund screener. This is to be expected because the broker doesn't support mutual fund trading.

Fixed Income Screeners

Lightspeed doesn't have a fixed-income screener. Again, this is to be expected because the broker doesn't support bond trading.

Tools and Calculators

Lightspeed doesn't have any calculators, but it does offer several trading tools to help you identify active and potentially mispriced options and equities. These include Vertigo, which identifies activity based on trading imbalance parameters such as puts/calls and buys/sells.

Trading Idea Generator

Lightspeed offers numerous trading idea generators and ways to find your next trade. These include Social Media Analytics, TipRanks, Gap List Scan, Block Trade Scan, Risers/Fallers Scan, Most Active Scan, Order Imbalances, and Halted Symbols. Options traders who use the Sterling VolTrader platform have access to a wide range of options analytics and trade idea generation features.

News

Customers have access to a streaming, professional news feed that's included in the basic market data package. It costs $10 a month for quotes and news for non-professionals. The headlines come from a variety of news sources.

Third-Party Research

Customers have free access to TipRanks, a valuable add-on tool that evaluates stock recommendations made by financial analysts and other professionals. It then ranks those experts based on accuracy and performance. TipRanks is integrated into the Lightspeed Trader front end to help drive trade idea generation. It can also be found in the client center on Lightspeed's website, allowing analysis access for all clients regardless of their preferred trading platform.

Charting

Charts stream in real time. You can customize colors, the chart type, such as area, candle, bar, line, OHLC, and table. You can also customize the period, both time-based and volume. Lightspeed offers market depth and most of the usual suspects when it comes to technical indicators, plus a variety of drawing tools.

Cash Management

Lightspeed does not automatically enroll customers in a cash sweep program.

Fractional Dividend Reinvestment Plan (DRIP)

Dividend reinvestment is not available.

SRI/ESG Research Amenities

Lightspeed does not enable customers to screen based on environmental, social, and governance (ESG) or socially responsible investing (SRI) factors.

Portfolio Analysis

The Lightspeed platform is designed for active traders, so the broker provides limited portfolio analytics. Buying power statistics display in real time, and various tools help you stay on top of your daily profit and loss numbers. Performance reports track profit and loss by the underlying symbol for both equity and options trades. You can export your daily transactions to Excel for further analysis. The company launched in September 2020, a risk management tool that lets you monitor profit, loss, halted trading symbols, and real-time trading activity. You can also access an automated, real-time short locate system. You can view risk estimates by symbol, strategy, or portfolio in a tabular or graphical format. You can also view an estimate of your portfolio margin requirements based on current positions and real-time market data. This is a unique tool and especially useful for high-velocity traders who use margin.

Lightspeed doesn't offer a trading journal, and you can't attach notes, graphs, or other market data to trades. But balances update overnight and profit/loss changes occur in real time. Lightspeed does have a trade blotter that lets you export trade data in a format accepted by various tax software packages, including TurboTax and TradeLog, which is designed specifically for active traders. You can also view a year-end statement equivalent to Schedule D or Form 1099.

Education

Lightspeed isn't the place to go for fundamental trading education, but you'll find a decent glossary, FAQs, product tutorials, the Active Trader blog, and various educational articles on trading basics and options. You'll also find futures contract details under the Resources menu. The company offers one ot two live webinars a month, and recorded trading tutorials and videos are available on demand.

Customer Service

General phone support is available from Monday through Friday during market hours. Phone calls are answered immediately under normal circumstances, according to Lightspeed. However, if investors need to schedule a call they can do so by filling out a form on the customer service page.

There's no online chat and no chatbot.

Security

Two-factor authentication is available for Lightspeed Trader, but biometric entry for the mobile app isn't available.

Excess Securities Investor Protection Corporation (SIPC) coverage is provided by Lloyd's of London for up to $25.5 million in cash and securities for each client account, subject to an aggregate loss limit of $100 million. Lightspeed Financial Services Group LLC's SIPC coverage is available only for securities and cash held in connection with the purchase or sale of securities in equities and equities options accounts.

The company has reported no recent platform outages and no significant breaches.

Transparency

Lightspeed's website clearly states details about commissions, leverage, and margin trading. High-volume traders must contact Lightspeed to determine the discounted rate for which they qualify. The Securities and Exchange Commission (SEC) found Lightspeed guilty of securities fraud in early 2021. The charge was misleading customers and profiting from lower "market center fees" charged by its affiliate for executing trades. 

According to SEC documents, "Lightspeed told its customers they could direct their orders to the trading venues of their choice and they would be charged the market center fees that Lightspeed incurred in executing their orders. In reality, Lightspeed disregarded many of its customers' directions and instead sent those orders to an affiliated broker-dealer (the "Routing Broker"), which routed the customer orders for execution and generally charged Lightspeed no or low market center fees. Lightspeed failed to disclose the Routing Broker's involvement and never disclosed to its customers that it routed their orders in contravention of their directions. Despite misdirecting its customers' orders, Lightspeed still charged its customers the fees for the market centers that they had selected, even though Lightspeed incurred lower fees or no fees at all."

Lightspeed was fined by the SEC for the violation.

Available Account Types

Lightspeed offers all the commonly used account types, including:

• Individual and joint taxable trading accounts
• Traditional individual retirement accounts (IRAs)
• Roth IRAs
• Simplified employee pension (SEP) IRAs
• Corporate trading accounts
• Trust accounts
• Limited liability company (LLC) accounts aimed at entity traders rather than individuals
  

Final Verdict

Lightspeed is a good fit for high-volume equities, options, and futures traders. The company offers a suite of innovative trading tools, flexible order types, and a choice of trading venues. Its flagship platform, Lightspeed Trader, is intuitive and has numerous customization options, plus enough hotkeys to keep your hands off the mouse and speed up your trades. But Lightspeed’s relevance is limited beyond the active trader crowd due to the high buy-in costs, high prices for casual traders, and lack of "easy" tools.

Frequently Asked Questions (FAQs)

Who Owns Lightspeed?

Lightspeed was founded as a division of Lime Brokerage. Lime Brokerage LLC now operates as Lightspeed Financial Services Group LLC. The company is still headquartered in New York City.

How Much Does Lightspeed Cost?

How much Lightspeed costs depends on your trading volume. Traders who meet monthly thresholds will pay fees as low as $0.001 per share and $2.50 per trade on equities and $0.20 per options contract. If you don't meet these thresholds, prices are higher, at $0.0045 per share or $4.50 per trade for stock and ETF trades and $0.60 per options contract.

What Is the Minimum Deposit for Lightspeed?

To use Lightspeed's web and mobile services, you must have a minimum deposit of $10,000. For the Lightspeed software, the account minimum is $25,000.