I see the purple non-auto-ex quotes (often just right after IB directs the order to that exchange ... it's kinda like the option specialist decides to put us on hold). But over the past few months, I've also seen quotes appear in light blue. What are they? Not listed in the manual.
Is IB's decision related to exchanges posting bids or offers to capture flow, and then not executing at the posted prices when someone tries to hit a bid or lift an offer? Can't tell you the number of times in the past that I have tried to smack something at Philly with no excecution, which essentially (because of the delay in cancelling orders) gave the floor a free short term option to fill or not as they see fit. Almost never route to Philly, but perhaps IB was responding to clients having problems where smart routed to the best posted price and received no execution for the cancel period. O.
I wasn't involved nor have any involvement with the decision on which prices to display. However, I'll bring the argument to the attention of a few people - including the chairman. When it comes to options, he's usually been one step ahead of the game but my guess that the motivation behind this is comes from what you post - send an order thinking you'll get filled and the exchange doesn't provide a fill. I vaguely recall reading that the so called linkage behind the exchanges being implemented allows an exchange can post the NBBO and execute away. Without knowing the ins/outs of the US option exchanges it is hard for me to comment but this could be a factor as well. As mentioned, I'll bring the fact that some of you aren't happy to the Sr. levels of the firm in the hopes that a compromise can be reached.
I also agree on this, SMART quotes should display ALL quotes available to IB, with a color change to signal non-autoex ones. ---
that still happens now. Since the flags are often incorrect the other way as well. (i.e indicates auto is available, so the quote is posted in SMART then routes to the Exchange and no auto really exists) But as I have stated this is the correct way to route your orders. It doesn't make sense to send marketable orders to Exchanges that don't have the best market even if it is a manual route. Let's say that the NBBO on an option is $7.40 bid $7.50 ask and the $7.40 bid is on the AMEX and there is no autoX available. Sending an order to sell at $7.40 to another Exchange will in most cases cause a manual route of the order as well, where the Exchange can "step up" and match the $7.40 price. In most cases they don't, holding your order until the $7.40 bid disappears then posting your offer. This manual process probably has fees associated with it as well (cancel fees et others as Exchanges hate it when orders are directed in this fashion). The other possibility is the Exchange sends the order to the AMEX via a linkage program - which brings me to why doesn't IB simply send it directly to the AMEX. Directing your order to the AMEX will most certainly give you the best chance of getting a fill at $7.40 and as such IB should also direct your order there via SMART. IB has consistently said that "best execution" should be the responsibility of the broker not the Exchange. I hope that this is still the case. The routing should be simple. If you guys have an open mind about this issue, I can provide to you how I would do it. My routing would be strictly based on your chances of getting an auto in different situations, which is where I would expect the lowest fees to take place. Let me know.
My initial comments said that I was speculating on the reasons and your comments are noted. To make sure things are clear, I'll restate that I don't know all the details behind the change but will make your and others concerns known (and as you know I haven't been shy about this in the past). Until I know the logic/reasoning behind the decision there is nothing further I can add.