Right... and unless the so-called throughput costs more than .20 per order they make money on each cancel as the cboe cost is 1.00.
even if you are correct in your assumption that we don't go over the threshold, you miss a few points: 1. isn't this a catch 22? If we drop the fee wouldn't cancels/modifys increase dramatically 2. do you know the policy on the ISE and other exchanges which charge? according to our last routing stats, the majority of our orders go to the ISE. the cboe is 4th in line.
1) Yes. 2) Similar, hard to believe the CBOE is behind the AMEX and PHLX; and if you tell me the PSE is ahead of the CBOE ...
Def, You are right in that I don't have a complete understanding of IB's options cost structure. I did look up ISE cancel fee which is also 1.00 and similarly requires more executions than cancelations. There are also many rebates and credits at the various exchanges too..... In regards to your catch 22 point, I have a couple thoughts from the perspective of an otherwise long-time happy IB customer who is bothered by paying these fees every day. I don't know the level of cancels IB was experiencing before it added the fee. But, my preference would be that you raised the basic per contract charge enough to cover the incurred charges. I assume doing this would still keep IB's fees very competitive. I also guess that I am not alone in noticing that this fee has converted what was a very cheap option commission into one that is now not so competitive. I hope IB reexamines this issue.
David, Fascinating!!!!! Aren't most people just using SMART? I don't know what your internal algorithm is for routing an order, but why wouldn't whatever it is cause an even distribution of routes amongst exchanges, with the autoex exchanges (ISE & CBOE) getting priority all things being equal? nitro :eek:
Yes, I think that part is true. I know several traders whose whole strategy was based on the fact that spreads were 1/8 - 1/4 wide, and once they went to pennies, they retired from trading. nitro