Good brokers vs. BAD brokers

Discussion in 'Order Execution' started by softdown, Mar 19, 2011.

  1. Interactive Brokers had this paragraph in their customer agreement:

    8. Proprietary Trading - Display of Customer Orders: Subject to all laws and regulations, Customer authorizes IB to execute proprietary trades of itself and its affiliates, though IB may simultaneously hold unexecuted Customer orders for the same products at the same price.

    Here is the link:

    Does this mean that when a customer places an order with them, and they want to put the same order, they can block the customer's order and put theirs instead ?
    Is this as bad as this sounds ?

    Also, what exactly does this mean: "Customer authorizes IB to execute proprietary trades" ?

    All this sounds quite scary. Don't the rules protect the customers against such things ?

    What are the reputable futures brokers which have a "fair" customer policy ?
  2. rosy2


  3. Or should that be : "no, but if it should happen 'by mistake' every now and then .... how will you ever know?"
  4. So that you can never accuse them of front-running. This is what it serves.

  5. Ok, but what does it mean then ? Enlighten me, please :) !
  6. Ok, but I still don't understand it: if they hold my order and place their order ahead of mine, that is front-running.
    The fair thing would be to place my order and theirs in the same order in which they arrive at their router: if my order arrives first, than it should go to the exchange first.

    Shouldn't the rules guarantee it ?
    Is there something I'm not aware of ?
  7. Worry about perfecting strategies that make money. If your broker provides poor fills, move the account. If je provides good fills, you have no reason to care about the internals of his business model.

  8. My question has nothing to do with fills, but with front-running.

    By signing this agreement, do I allow them to front-run my orders ?
    Can someone please clarify this issue ?
  9. cvds16


    jesus, do you really think Ib needs to frontrun your GIGANTIC order ?
  10. Their model is simialr to that of a casino. No casino needs one particular player but it needs many players to make money. One dollar is nothing but 100,000 dollars is something. By allowing their HFT bots through subsidiaries to front run customer market orders brokers make billions, 1/10 of a cent at a time. Learn how to multiply:)

    P.S. Although I believe IB is a better broker than others I have dealt with.
    #10     Mar 19, 2011