"IB LLC" more busy than Timberhill w/ "counterparty" market making?

Discussion in 'Retail Brokers' started by Option Trader, Mar 10, 2008.

  1. I leave room for IB to explain themselves, but this is a tough one.

    I was going with the understanding that IB is NOT involved in market making themselves, rather Timber Hill does the market making, and that there is a Chinese wall between the customer orders & the market making (as Thomas Peterffy says, and as quoted on this board by IB employees). With this, I took a level of comfort that what's going on with my trading and personal account is protected information.

    Today, I visited the site www.Nasdaqtrader.com, (under "market statistics", then under "market maker volume"), and it shows in the stock that I trade most, Timber Hill LLC's volume is 33,982 shares of NASDAQ (expected); but a group under the name "Interactive Brokers LLC" shows volume of 76,812 for the month of January!!

    I never understood why orders that are filled with Timber Hill should have two ways of specifying the order; one "IDEAL" and the other "Smart". Does the above explain what is really going on?

    Again, if this is all a mistake, I apologize in advance.
  2. JackR



    I'm not sure precisely which of the screens you looked at on the NASDAQ site. But I poked around and it's my guess that you are looking at the activity (volume) from the various firms that are members of the NASDAQ. I noticed TD Ameritrade and other large retailers in there along with IB and Timberhill. I'd say you what you are seeing simply reflects what we know about both IB and TimberHil - they are a large part of the volume.
    The Timberhill numbers reflect the proprietary in-house trading and the IB numbers reflects customer trading.

  3. I didn't think of that possibility, and I hope you are right, but as a customer, all my trades with this stock go on NYSE, not on NASDAQ. Also, the list provides market maker volume, not broker volume, which makes me wonder.
  4. JackR



    I primarily trade futures. But, reading the posts here on ET over the years it would seem that when stock traders elect the unbundled commission structure some of them are working the "provide liquidity/take liquidity" end of things. It would be my guess that IB must be identified as the liquidity provider\taker for all trades they enter on behalf of its client.

    Which specific NASDAQ screen are you referring to?

  5. This is what it says in the URL: http://www.nasdaqtrader.com/Trader.aspx?id=MPVolume
    It involves pushing Market Statistics, then Market Maker volume, then one enters the stock symbol (which they call the "issue symobl")
  6. JackR


    IT would appear that the key to what is being reported is in the statement that it is based on the "FINRA/NASDAQ Trade Reporting Facility".

    See http://www.nasdaqtrader.com/Trader.aspx?id=ACT and http://www.nasdaqtrader.com/content/ProductsServices/Trading/TradeReporting/trf_faqs.pdf

    If I read it correctly the IB volume could include some of the Timberhill volume and vice-versa as the FINRA reports all off-exchange trades. So when IB trades with Timberhill the number would appear in both places. If you'll recall the NYSE reports a trade once, the NASDAQ twice.

    Just my interpretation of all that stuff.

  7. GTC


    JackR, it is not related to "unbundled" versus "bundled" commission structure selection.
  8. JackR



    My earlier post was a guess, as I indicated. After reading the two links I posted later I agree, it's not.

    But I do think OT has nothing to fear.

  9. JackR, GTC, and others, are you ready for this one?

    Just called up the Nasdaq number: 212-401-8700. They told me that the volume shown for the MM's has NOTHING to do with customer volume that are filled elsewhere; rather it ONLY has to do with where the MM's are YES taking the other end of the trade!!!
  10. There are many advantages of IB, and I just hope there would be someone to contest the implications of this information. IB, why are you being silent? Are you taking the other end of the trades under IB LLC, but didn't tell us for fear of provoking the wrong people on this board? If you do take the other end of the trade, is it with the standard of "Chinese wall" here also? Or is the standard "no different than other broker-market makers? Whatever the answer is, it's only fair that we know the rules of the game.
    #10     Mar 12, 2008