I have been having a problem at IB that has been getting worse lately and wanted to see if anyone else has been experiencing the same thing . I was hoping we could nail down some specifics here before formally getting tech support to try and fix it. I will enter an option order, routed BEST to sell to open at the ASK as a GTC order. The order goes thru and is accepted on day one. Usually, I sit there as the ask til someone buys from me. I occassionally adjust the price as the underlying moves so that anyone who wants to buy the contract will be buying it from me. On day one, everything works great. It seems that each successive day, IB resends the option order automatically at the open. On numerous occassions, I have watched as the NBBO moves through my price and orders get filled at HIGHER prices than my order from the second day forward. In addition, my order is NOT posted at all although TWS shows green. I try cancelling and that causes the order to freeze pink. I average about 1.5 calls per day (over the past few weeks) to IB to correct these problems, and they have yet to fix any of them. The IBhelp person calls the exchanges and inevitably comes back to tell me that "they all report that they do not see the order". They do not see the order or the cancellation. It's as if the order doesn't exist on the second day. Sometimes, I enter another order at my new price and wind up getting filled for both orders, leaving me with naked calls that I now have to close. This clearly appears to be a system problem that is occurring and the frequency is getting high, about 50% of all my orders. I have not specifically looked at which exchanges are involved or any other detailed issues. Is anyone else experiencing this? Thanks
I found that when I left an option order GTC, the system either keeps the order for the ISE or P-Coast exchanges. Then the option would open on the AMEX or Philly at my limit or higher. The order wouldn't be reflected until the exchange opens. Then I would miss a possible execution. I just end up routing the order directly (as opposed to BEST). I either pick an exchange (usually the one with the best volume) or split up my order and place it on the various option exchanges to make sure that I have the best possible chance of getting an execution. Once when all exchanges open, I go back to BEST or pick an automated exchange (ISE or P-Coast) where I can quickly cancel my order if necessary to route to another exchange.
Are you leaving the orders overnight? I have no problem waiting til the exchange opens. The problem is that the order is NOT SEEN by any exchange throughout the day. I don't get executed and when I try to cancel it freezes pink. Then I enter another order, sometimes only the new order executes and sometimes the second order will execute hours later, leaving me in a bad situation. IB cannot remove the order and the exchanges claim to IB that they do not see it. This is now requiring me to re-enter every option order every day. I have to keep a note file of all the positions that I need to write and the prices and type them in (new) each morning as a day order. This is ridiculous. I know there aren't that many of you out there doing GTC options at IB.
I usually have a number of GTCs working with IB and other brokers. I do have to police the IB orders more frequently that my other brokers. Are you sure that this is a problem the exchanges want to solve? They are getting increasingly aggressive with respect to anyone other than a MM trying to take-over the NBBO. For example, If I have a GTC on one side (sell at ask) and enter an order on the other side (buy at bid), the first GTC will cancel in some broker systems. In others, the second order will not go live.
I entered an order (to close) this morning on the CBOE. They opened the option and didn't change the quote to reflect my market at all. I tried to cancel the order, the IB system went pink. It stayed pink all day until I got an execution (around 12:00 pm or maybe 1:00 pm). I am guessing that the problem resides from the exchange. With the AMEX, Philly, or CBOE, the order gets to be "seen" by the specialist/market maker to see if they care and want to trade against the order. No problem with the ISE or P-Coast (which are automated markets) where any order I send there is immediately reflected by a new quote. Thus, if I have the chance, I leave all orders directed to the ISE or P-Coast (even if it is GTC). Don't seem to have a problem then.
If I post an order, they must either transact it or post it if I'm inside. That's the rule. In some cases, I would have been doing them a great favor by adding liquidity, but the orders never made it. Until I can get this cleared up, I must continue to re-enter them each day.
It's more than just "aggressive". The option exchanges have effectively prevented individuals from making markets (see IB's comment letter at http://www.interactivebrokers.com/download/comment13.pdf). Apparently, some brokers have implemented the rules in the harshest way possible, by not allowing buy and sell orders to exist at the same time, which is absurd. At least IB took the rational approach of leaving it up to the trader to comply.
That actually isn't true. IB will prohibit traders (at least in the same account) from entering a buy order and a sell order on the same option (even if it is on different exchanges).
You're right. They must have done this sometime after the initial rule went into effect. I don't trade options much, so I didn't notice. This is really unfortunate, since it's a routine investment decision to have a target buy price and a target sell price. There's nothing in the rules that prohibit this behavior. The prohibited behavior would be if you routinely moved the prices of those orders in an automated way as the underlying moved. It's truly amazing that the SEC allowed this to happen. I can't think of a more blatant case of restraint of trade. Maybe the fact that AMEX received approval (see http://www.amextrader.com/Trader/News/amexnotices/120401.stm) to prevent auto-quoting of ETFs (including QQQ) will raise enough concern to get this silliness repealed.
alanm, doubt it. read IB's opinion letter to the regulators, can't be more clear than that. Obviously the power lies with firms/floor traders who benefit from the status quo and refuse to look into the future. In the end my guess it is just another opportunity for another electronic exchange (like the ECN's via NASDAQ) to appear on the scene.