The response that one of my friends got from IB rep after opening a ticket: "Smart routed combos may be held internally and not routed to an exchange. This may occur because either: -the order is not marketable -the order is not accepted natively on an exchange and is therefore being held by IB and attempts will be made to simultaneously send orders for each of the legs to obtain the combo (spread) execution." Today I placed an order for one of the straddles when the bid/ask was 7.30/7.50. My order was 7.40 and I saw it immediately at IB platform, but on TOS platform, the bid/ask remained 7.30/7.50. I don't know why we are getting contradictory responses from IB.
None of these platforms show the COB at the exchanges, only the NBBO from the legs. iB also seems to add in orders in their system. TD I believe first routes the order to an option dark pool like knight then a fraction of a second later to the COB where they get the most PFOF, unless you are able to direct your orders, which some TD. Clients can.
Yes, I have lately also noticed a change in spreads not seen on other brokers who are placed on the book at IB. I also note that when I execute for example 50 or 80 contracts on the 6E and I look at a direct feed from the CME, my 80 order who got filled isn't displayed on the public time and sales. Meaning probably IB just filled it and held it or distributed internally to their customers. I guess that's what they call 'smart'
You can view for CBOE http://www.cboe.com/cob/cob.aspx Also see; http://www.nyse.com/pdfs/Complex Orders in SPY and IWM amex.pdf
I thought that internalization is not permitted for futures and that all trades must be executed on the futures exchange?