Cheap commsions with IB and..

Please don't get upset everyone. It's just when a company is related to Timber Hill which specializes in arbing/making markets you have to ask yourself how IB can put out such cheap commissions? Cheap commissions and great fills? or Cheap commissions and bad fills? You go ponder your thoughts and figure!

Facts:



1986

* Timber Hill becomes a member of the Pacific Stock Exchange and the Options Division of the New York Stock Exchange (NYSE).

* The trading system is reprogrammed to operate on a network of SUN workstations.

* The firm's traders generate a 430% return on equity for the year with the new system.


1994

# IB LLC is regularly named one of the top ten program traders at the NYSE.

2000

# Timber Hill becomes a Primary Market Maker on the ISE (International Securities Exchange), the first fully electronic US options exchange.

 

I'm happy to have pleased you with my contribution. To bad I can't say the same about yours.

 

I'm guessing that this is a waste of time, but just in case this person actually believes what they are spewing:

"jenna":

If you had done any trades through IB, you would know exactly how and where you get executed, and that it is according to your instructions. They aren't some magic black box that you send orders into and get executions back from. You choose exactly which electronic market to send your orders to, and that's where they send them. With one exception (see below), you can see the orders appear on the electronic order books of those venues, and you can see them get hit and print on the tape. There's really no way for T-H to trade against your order any differently than they trade against any other public order.

With the addition of the TMBR routing recently, you have the option of sending it to T-H for execution at the NBBO or better if they are interested. If T-H is not interested, it routes to the next best destination. There is no additional time involved, other than the brief time it takes to execute an additional IF statement in their routing algorithm. T-H publishes a quote that the routing algorithm can see. They never see the orders and therefore can never take liquidity from them. They can only provide it.

Again, you have the choice of allowing this or not. If you don't want to have this extra facility available, you don't have to use it. I've been with other brokers who have had such auto-ex relationships with a market-maker, only to have the MM decide to stop doing it because the retail traders were too good! We regarded the auto-ex ability as a good thing when we had it.

Recently, I sold 2K shares to T-H on the bid of an NYSE stock just after it became clear that the NYSE was about to gap down. The next print from the NYSE was 0.50 lower, saving me $1K. I don't even remember having seen a direct-access broker with an auto-ex for NYSE stocks before.

Do you realize that what you are insinuating is a serious matter if it were true? The kind of thing that brokers get fined and lose licenses over? Do you honestly think that T-H would risk their huge prop business to trade against their relatively tiny public customers? Do you honestly think it's right to simply keep making public accusations without any evidence?

li·bel: 'lI-b&l; noun;
1 a : a written statement in which a plaintiff in certain courts sets forth the cause of action or the relief sought b archaic : a handbill especially attacking or defaming someone
2 a : a written or oral defamatory statement or representation that conveys an unjustly unfavorable impression b (1) : a statement or representation published without just cause and tending to expose another to public contempt (2) : defamation of a person by written or representational means (3) : the publication of blasphemous, treasonable, seditious, or obscene writings or pictures (4) : the act, tort, or crime of publishing such a libel.

 

Yep, we've had truly fantastic returns. Given your logic we wouldn't have made any money before 1998 (when we started retail) and wouldn't be making money in parts of Europe and Asia where we don't offer equity and options trading for our clients. If you trade via the firms platform, the integrity of IB's executions wouldn't be questioned.

But some more Facts :
I'll repeat, IB/Timber Hill didn't offer retail brokerage until 1998. According to your logic how did we manage to achieve stellar returns before taking on clients.

Timber Hill is one of the few firms that honor their options quotes. Ever wonder why the ISE has rapidly grown?

IB has fully disclosed to its clients and regulators that it only internalizes an order if it can equal or better the NBBO. http://www.interactivebrokers.com/html/retailAccount/sampleForms/order_route.html It's a win/win situation. Faster fills for both sides.

Now back to how does IB charge so little.... We are probably the most efficient trading firm in the world. Including IB personnel, we have less than 450 people world wide. Yet, we do well over 200,000 trades per day on average - more than 450 trades per head. This creates something called economies of scale. The marginal cost of an additional trade is less than what we charge in commissions.

In short, our client base would not continue to grow on both the active retail and institutional sides if we played games with order flow.

 

apology accepted. im glad to see that were all in agreement here.

 

OldTrader: “if your goal is to defend the site against this shallowness, I'm surprised I don't see more of your posts.”

Since I don’t recall stating that my goal was to defend the site against shallowness, it should not surprise you to see so few posts from me as of late. The fact that all too many posts on EliteTrader are combative and juvenile is the very reason I no longer care to spend much time writing here. It’s a pattern I’ve seen repeated by many of the excellent members of this site who had been here before and some after me. I don’t pretend to know all of the specific reasons as to why many no longer contribute but I’d guess that the disrespectful atmosphere is a contributing factor.

“I agree, I do think my post was "shallow". I didn't read the post thoroughly enough before I responded. My mistake there.”

It is hard to imagine you feel you’ve made a mistake, as you claim, when the sarcastic and condescending tone throughout your post belies any genuineness on your behalf.

“I've made 90+ posts, most of which took considerable time and thought. One would hope that the members of this site are able to look at the entire picture, as opposed one aspect of the picture. If not, then all of that time I've spent with that, and answering PM's was misspent.”

You don’t need to flash your “medals” to impress upon me the value of your contribution here. I'll take your word that your previous posts have been thoughtful. I did not call your history into question, only your current behavior. It’s the lack of respect and tolerance that you display when hurling insults at another member that is all too ordinary on this forum. So ordinary, in fact, that it's become boring.

“But back to the made point...yes, it was shallow....and thank God you were here to catch it.”

As I’ve said, your sarcasm simply reinforces the perception that you feel that your original insults are acceptable even in light of the fact that you misread, as you imply, fooliosbrother's post. It seems that you are merely paying lip service to civility. So be it. I won’t bother to take what you’ve said seriously.

 

As a new IB user I cannot tell you how happy I am with their system and the fills I'm getting. Their low commissions make it possible for a small size trader like me to use a mechanical system.

I switched from BrownCo and will never look back.

gs

 

Well that's alot of fancy guesswork, supposition, and downright confusion on your part.

I doubt if there is any post that could have been made that would have lived up you whatever your expectation is/was.

But to clarify, I believe my post was shallow, and if I had it to do over again, I would have read foolio's post more carefully, and in all likelihood might not have responded at all.

However, you are correct that there is sarcasm contained in my post to you. If you will reread my post you will find that my sarcasm is not directly to foolio...rather, it is directed to you. So let's just say there are two issues here:

1) whether my post to foolio was proper and

2) whether I owe YOU any level of contriteness at all

I think I have more than amply answered #1. But I'm wondering who appointed you the judge and jury of satisfactory posting at this site. Please be aware that any sarcasm that you sense in my post reflects my belief that no one did. Further, I don't think I owe YOU any type of apology....but I responded to you since you stuck your nose in it, rather than to foolio who, at that point, was telling me to "fuck myself".

So what you read contained my comments regarding foolio, and contained my sentiments regarding you. Hopefully this will clarify that my sarcasm is toward your role in this matter, NOT toward my regret over my comments to foolio.

OldTrader

 

IB's commission is reasonably good. Beside, they listen to the traders community, updates trading platform periodically, and offer wide range of products. Only deficient I can find is that the connection breaks up periodically. It need to improve on it, may be through a back up system. May be it is using world com's internet technology....lol