I know that some people have an all inclusive rate and others pay ECN fees and get rebated back a month later for adding liquidity. Is it better to have a flat commission rate or to pay ECN fees and get ECN rebates back? Or does it come out even? I figure a flat rate is better because your prop firm could be stiffing you on your ECN rebates and it would be hard for you to know.
So you have to keep track of every trade you get a rebate on....????? So you have to go through your trading sheets every day...then again at the end of the month to make sure you get your rebates....that sounds like a HUGE waste of time...is it really worth it. Can someone who does the ECN rebate comment, I would like to know the positive side of this. Thanks.
You really need to sit down and do the math in regards to your trading style. Go over your sheets for the past couple of months, maybe even put your fills on a spread sheet. Determine what percentage of your trades are taking liquidity (you are taking offers or hitting bids) and what percentage you are adding liquidity (your bids are getting hit and offers taken). You might discover you are paying a much higher rate with an all-in (all ecns fees included) deal than you would be if the ecns were passed through. While everyone should consistently check their sheets to make sure all your fees are on the up and up, I have built up a level of trust with my firm that I do not feel the need to calculate my rebates to the penny everyday. Also I believe some firms give the rebates at the end of the month (IMO this is BS as they are making interest on rebates they are holding back, and some are added or subtracted the next day.
rebates much better. most pro firms inlude the rebates automatically every night so you don't have to break them down. actually for someone trading naz hitting markets you can't beat ib's .005 all in no sec fee. but its not a good rate for someone doing nyse
It all depends if you add or remove liquidity. If you remove often, then an all inclusive deal is better.
you have to check with your broker to see what the passthroughs are per ECN, and how transparent those are as well. So many traders take what their broker says at face value, not even knowing what the proper rebates SHOULD be. Basically, rebate or full pass through models will always be better for you, and the bookkeeping should be easy to verify from your broker. Again, transparency is key. Unless you are an aggressive liquidity provider, unbundled + fees/rebates will be better. Every broker is pricing you UP not down to take care of the rebate, and probably will figure out your profile - whether you are a taker or a giver - before doing so. Their defensive posture would to price UP, not down and guess. Pricing, however, all in sometimes is necessary if you are as fund or somewhere where all investors have to see the same price for each trade - in essence, bundled. The ease of the fixed price in allocations, etc, would make bundled easier - but most likely not cheaper.
thanks for that link to your post. My next question is....am I really getting screwed if I am in a situation where I get my rebates at the end of the month, instead of daily when my trades clear? Who has the end of month rebate and who gets them daily? My firm told me that the ECNs pay once a month...is that true?
That seems out of the ordinary. Are you sure this isn't a monthly commission rebate once per month? What broker?