Fee with IB

Discussion in 'Retail Brokers' started by sungtaeyoo, Oct 28, 2010.

  1. IB has very good transaction fee for future and option trading. But not for stock. It doesn't have flat fee like $10 per any stock trading. So if I trade more than than 2000 shares it' more than $10. Is there any way I pay flat fee with IB?
     
  2. joe4422

    joe4422

    Not necessarily. Why don't you send the question to them, or read in more detail about their pricing structure.
     
  3. bigpapi

    bigpapi

  4. cstfx

    cstfx

    They only offer per share pricing, whether bundled or unbundled fee structure. *


    * speaking from a retail perspective - they may have different agreements/arrangements with the various institutions that clear and trade thru them, but from the perspective of a retail trader, flat pricing does not exist at IB.
     
  5. luisHK

    luisHK

    Received their fee listing recently and indeed it looks quite expensive if one deals in large lots - thought they were cheaper
     
  6. Get another flat-fee account for large lot trades.
     
  7. def

    def Interactive Brokers

    You need to consider all factors. The firms offering flat fees are selling your order flow and often cap the max amount for the flat fee at 5000 shares. If IB's executions are better the hidden cost of that low flat fee you are seeking can be quite high. Just do the math. Take 5000 shares * .01. A penny better execution from IB will save you $50. The independent audit stats from TAG show IB providing 28 cents better execution per 100 shares than the NBBO vs the industry of a -3 cents. So on that same 5000 shares you can actually save $140 less the commission for a savings of > $115.
     
  8. luisHK

    luisHK

    Do you have links on this study and others ?

    There is no number of share limitation with Etrade and I trade up to 50K shares at a time, which is a great saving compared to IB pricing structure - but definetely lost significant amount on slippage several times when using market orders and suffered some very partial fills on limit orders
     
  9. def

    def Interactive Brokers

    Slippage is a hidden cost that will kill you. E-trade doesn't route directly to any exchange, they go through citadel, etrade capital and citibank. The firms paying for that flow are looking to profit off it, they may not have your best interest at heart.

    I also see you posting asking about European shares. The exchange fees are much higher in Europe and execution from some firms in general is horrendous as the TAG study found IB's executions net euro improvement over the industry average a whopping 2.84 euros per 100 shares better. Throw in the cost of margin where IB is up to almost 7% cheaper than firms like e-trade and you'll realize that the savings you're trying to seek in your flat fees are not that great after all.

    http://www.interactivebrokers.com/en/general/education/comparebrokers.php?ib_entity=llc

    As you mention the size you trade, I suspect you're trading penny stocks. If that's the case, IB does cap the fees to 0.5% of trade value plus exchange, ECN, and specialist fees. In any event, do your homework and I suggest that you look at the hidden and not so hidden costs when seeking a flat fee. There is simply no free lunch.

    E-trades 606 report is at the following link:
    https://content.etrade.com/etrade/powerpage/pdf/OrderRouting11AC6.pdf
    1 E*TRADE receives payment from its affiliate, E*TRADE Capital Markets, LLC (“ETCM”), a wholly owned subsidiary of E*TRADE Financial Corp. (“ETFC”), for directing listed equity order flow. Payments received from ETCM averaged less than $.0008 per share. ETCM executes on a principal basis and may have profited or lost in connection with such transactions.
    2 As of September 30, 2010, Citadel and its affiliates owned approximately 9.9% of ETFC. In addition, part of the financing and investment transaction in Q4 of 2007 related to an execution services agreement with Citadel and E*TRADE's commitment to route certain types of equity orders through Citadel for three years. Payments received from Citadel averaged less than $.0006 per share.
    3 Payments received from Citigroup Global Markets, Inc. averaged less than $.0032 per share.
     
  10. luisHK

    luisHK

    Thanks for the info and the link.

    I'm mostly doing 150 to 300K usd trades so the total cost as 0.5% would be quite high - I definetely see some serious problems sometimes with slippage but this kind of amount on high volume stocks will most of the time pass easily as a limit order.

    Margin rates and the portfolio margin are definetely a plus for IB.

    As of trade of european stocks with IB there is mostly a 29euros maximum commission so they apparently end up cheaper than US trades on moderate volumes. Any feed back on the reason ?
     
    #10     Oct 30, 2010