What Is Scottrade Pro and What Happened to It?

Scottrade Pro was a trading platform designed for active and professional traders, offering advanced tools to manage complex trades. It was part of Scottrade’s brokerage services before undergoing significant changes due to industry acquisitions.

Understanding its fate requires examining its transition after TD Ameritrade acquired Scottrade in 2017. This restructuring directly impacted Scottrade Pro users.

Eligibility Requirements

Scottrade Pro was designed for traders using high-frequency or sophisticated strategies and required a margin account, enabling users to borrow funds for trading. Under FINRA Rule 4210, margin accounts had to maintain at least $2,000, though more advanced strategies often required higher balances.

Options and futures trading required additional approvals based on experience, financial resources, and risk tolerance. Options eligibility varied by strategy, from basic covered calls to complex spreads and naked options. Futures trading required disclosures about leverage risks and market volatility.

Day traders faced SEC Pattern Day Trader (PDT) rules, requiring a minimum account balance of $25,000 for those executing four or more day trades within five business days. Accounts falling below this threshold faced trading restrictions until the balance was restored.

Brokerage Commission Structures

Scottrade Pro used a tiered commission structure, reducing costs for high-volume traders. Unlike standard brokerage accounts that charged flat fees per trade, its per-share pricing model benefited traders executing large orders.

Options trading fees included a base charge plus a per-contract fee, with discounts for high-volume traders. Additional costs included regulatory charges from the SEC and FINRA, which could accumulate for frequent traders. Routing fees applied when traders used direct market access (DMA) to execute orders on specific exchanges or electronic communication networks (ECNs).

Clearing and Settlement Arrangements

After execution, trades on Scottrade Pro underwent clearing and settlement to ensure completion. Clearing verified trade details, matched orders, and determined necessary funds or securities. Settlement finalized transactions by transferring ownership and payments.

Scottrade Pro relied on a clearing firm to manage these processes, reducing counterparty risk. Clearing firms facilitated netting, allowing traders to offset buy and sell orders to minimize capital requirements. In the U.S., equities were cleared through the National Securities Clearing Corporation (NSCC), while options contracts went through the Options Clearing Corporation (OCC).

Most equity trades settled under the T+2 rule, meaning transactions were completed two business days after execution. This period allowed clearing firms to reconcile records and ensure fund availability. Options settlement varied depending on whether contracts were exercised or closed before expiration.

Transfer Procedures

Asset transfers to or from Scottrade Pro used the Automated Customer Account Transfer Service (ACATS), operated by the NSCC. ACATS streamlined the transfer of stocks, bonds, mutual funds, and other eligible securities between brokerages, reducing errors and expediting the process. Most transfers were completed within six business days under FINRA Rule 11870.

To initiate a transfer, account holders submitted a Transfer Initiation Form (TIF) to the receiving brokerage, which worked with Scottrade Pro’s clearing firm to verify holdings. Some assets, such as proprietary mutual funds or alternative investments, were not ACATS-eligible and required manual processing, leading to longer transfer times. Investors could opt for full or partial account transfers, depending on whether they wanted to move all holdings or specific assets.

Regulatory Reporting Obligations

Scottrade Pro had to meet various reporting requirements to ensure compliance with financial regulations. Brokerages submitted records to regulatory bodies such as the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA).

One key requirement was the Consolidated Audit Trail (CAT), a system tracking all order events across U.S. exchanges to help regulators monitor market activity and detect manipulation. Scottrade Pro also submitted trade reports to the Trade Reporting Facility (TRF), which recorded off-exchange transactions.

For tax compliance, Scottrade Pro issued IRS Form 1099-B to clients, detailing capital gains, losses, and cost basis information for securities transactions. This form was essential for investors when filing tax returns, as it outlined short-term and long-term gains subject to different tax rates. The brokerage also adhered to cost basis reporting regulations under the Emergency Economic Stabilization Act of 2008, ensuring accurate purchase price data was transmitted to both investors and the IRS.

Fate of Scottrade Pro

Scottrade Pro was discontinued after TD Ameritrade’s $4 billion acquisition of Scottrade in 2017. TD Ameritrade replaced Scottrade Pro with its own thinkorswim platform, which offered similar advanced trading tools.

By 2018, Scottrade Pro users had migrated to thinkorswim or TD Ameritrade’s standard platform. While some found the transition smooth, others had to adjust to different interfaces and order execution processes. The acquisition also introduced changes to commission structures, margin requirements, and platform functionalities, reflecting TD Ameritrade’s approach to serving active traders.