1. within a month or so the top 200-250 option classes will be listed on the BOX and IB will offer soon offer a number of order types specifically tailored to take advantage of the pip. 2. throughput: every broker is connected to an exchange via a gateway and phone lines that will allow only X number of transactions per second. if you use up all your throughput, speed will be affected and a traffic jam of orders can be created. some exchanges will allow you to purchase additional throughput (via another gateway, additional phone lines, routers, etc) and others have no flexibility. i can't quantify the cost of lost speed but if speed deteriorates the cost is not only bad or missed fills but lost clients.
Def, Consider raising commissions if bandwidth to Box (etc) is limited or incrementally expensive. The ability to cancel orders instantaneously is the key to successful options trading. Applying fees to cancels started as a cynical move by certain option specialist units. Make it impossible for smart order flow to trade, thereby leaving dumb order flow. If an exchange has no cancel fee, please find a way to not charge IB customers one, for orders routed to that exchange. Orders will eventually all migrate there, and any exchanges still charging cancel fees will be forced to reconsider. {quote by def} 2. throughput: every broker is connected to an exchange via a gateway and phone lines that will allow only X number of transactions per second. if you use up all your throughput, speed will be affected and a traffic jam of orders can be created. some exchanges will allow you to purchase additional throughput (via another gateway, additional phone lines, routers, etc) and others have no flexibility. i can't quantify the cost of lost speed but if speed deteriorates the cost is not only bad or missed fills but lost clients.
Successful traders just forget about canceling cost and forget begging IB change some fees or something else. Think about it. It's been over talked. How are you going to capital on it when it's been over talked? Get a life and move on.
2. $1.00 a cancel all exchanges CBOE, AMEX PHLX= 500 fills & 501 cancels, end of month charge is $501 ISE= 500 fills & 501 cancels, end of month charge is $1.00 PCX= not possitive here, probably like CBOE The charge is based on all fills vs cancels for the month for each executing agent. This method is flawed,as it punishes all for the actions of a few ( the ex-floor guys attemting to play Market Maker with a retail status).
I am pretty sure that the scenerio you described is going to result in a charge of $501... The rule only punishes routes used by pro traders; ma and pa should mask the order flow of a retail broker like IB ...
IB has a lot of retail clients that would use smart and have 100% fill ratio, while a pro trader might have a 25% fill ratio. If your ratio of retail to pro is high enough, your route would incur no cancel fees because your overall fill ratio would exceed 50%.
I don't understand something, following this logic we should conclude that is not possible in theory to have a low cost trading as the ECN does and that Island whose process a lot more trades each day than any option markets cannot do it at effective cost? IMO, it seem ECN on stock have higher bandwidth, do better than option at lower cost, are more effective and speedier than them without comparison, it is hard to justify cancellation fees on this base, no? Why option could not do the samething?