I've had problems with IBs "Smart/Best" routing. With a posted bid of 1.00 and autoex on, I will enter an order to sell a few contracts at 1.00. About half the time, I get routed somewhere else and then posted. Most of the time, somebody will pick me off after a few seconds, but other times I sit for a long time til the bid is going to cross me, then I get filled - or the market moves away and I have to chase it. I've cancelled and resubmitted only to be routed to the same exchange again and again using BEST/SMART. I've contacted IBhelp and they've not been able to give any answers - they've referred it to the programmers - but this has been going on since I've been at IB (about a year). Up until recently, I could just re-enter and preference the exchange with the best bid. Now that I have to pay double to do so, it's no longer attractive. It seems that if they are going to give financial incentives to use SMART, they need to ensure that it really is "smart". Otherwise, I'll keep locking the options market. Anyone else have this experience?
I tried to sell some Boeing options making the market tighter in doing so. SMART sends the order to the PHLX which then took minutes to cancel when I changed my mind! What is wrong with the ISE or PSE?
I realize there are problems with IB's option order routing. Each one of you should make a point to send them examples of SMART doing the "wrong" thing. Routing of orders to the PHLX should be avoided as discussed in this thread. The more traders that IB hears from, the better chance they will fix the problem.
If SMART routing always directs your order to the best bid/offer. Is there a reason why a 5 lot trader like me would chose to self-direct and pay almost twice the commish. What circumstances would merit paying the higher comm for a 5 lot order? Another important question is when should I not use SMART routing vs. the higher order type. Thanks
You're probably best off entering your orders smart unless there is only one exchange at the price you want to hit and it is purple. This is the situation where "smart" definitely ignores price.
If Philly is the best exchange it can seem like it takes DAYS to get filled and then only when the position starts to move against you. If I'm using the the SMART, I do the following... ALWAYS have the string of all exchanges open to open to find out which exchange has the best price. If it's Philly, best to route yourself and eat the $5. I NEVER get a good fill at that crooked exchange. If you want to cancel at Philly they can hold it for what seems like an eternity before confirming cancellation. There was a really good thread about this particular exchange a while back. Makes for interesting reading. Good Luck Cracked
When you route to the PHLX; cancel as soon as the order goes live to start the two minute clock working; force them to fill or fade.
Thanks meteoxx and cracked. I guess to sum it up. Use SMART unless it is Philly -and if you need to use PHLX submit and cancel to start the shot clock. Right? It is unfortunate that in this day and age we still have to play these games. Thanks again!!