IBG LLC makes about 80% of it's money from market making activity. http://individuals.interactivebrokers.com/download/sp_rating.pdf What a great idea for a market maker to run a brokerage firm as well....
Payment for Order Flow - Options: IB receives order flow payments in varying amounts (from 65 cents to 75 cents per eligible contract as of July 2007) from U.S. option exchanges, specialists and/or market makers pursuant to the mandatory marketing fee programs that have been adopted by the exchanges and approved by the SEC. For options that are quoted in penny increments the payments generally are between 20 cents and 25 cents for eligible contracts. If multiple exchanges are quoting at the NBBO for an option order and IB has discretion as to where to send the order or a portion of it, IB generally will âbreak the tieâ by sending the order to an exchange where it will receive the most payment for the order, or to an exchange designated by the firm from whom IB will receive the most payment (typically IBâs affiliate Timber Hill LLC â see below). Taken directly from the disclosure,"Order Routing and payment for order flow" dated February 7, 2008. Care to revise your statement?
thank you volatilitypimp as that explains whats happening. so the whole idea is to force one to smart orders which are 1/2 the commission of directed orders then screw you by routing to "there"preferred market maker. hell since most exchanges quote the nbbo they can direct were they want. its funny as hell to see an option thats $6.20x$6.40 and i put a bid in at $6.30 with ib and then i see 6.30x6.40 then i enter an order with another broker to buy at the bid of 6.30 and am getting fill after fill and my ib order is never filled. now that ib is a public company we can expect more of it. no different than with stocks going to timberhill are ideal were they get nice order flow. i thought ib was a step above amtd are etrade but i guess not
OK. So you've had a good whinge now. So get over it. Are you a trader or a whining little girl? Make your mind up now! If you're not happy with the routing then either get quotes for alternative exchanges and submit to your advantage or ... just find another broker! Hell just submit them all to your other broker if you're so happy with them. But this boring whining day after day ... just like a 2 year old. So, get on with it. Do something about it and tell us how wonderful it is in a month or so. You can even tell us your plan now if you want. But no more whining --- work your way back on my attacks on IB whiners over the last few years and then notice how they all stopped trading. It seems that excessive whinging and failure as a trader go hand in hand. Lets not see another one fall into that trap??? Good luck.
Correct -- if it's a fill inside NBBO then someone picked it off, no foul. ISE is always more competitive than CBOE, so I suggest you route to ISE and pay a little more.
So you are just going to fail. And probably squealing like a little girl on your miserable way. Hopefully you'll keep trying for long enough to do some good by feeding the rest of us. Cheers
I'll gladly clarify what I meant. Selling the order flow is normally understood as routing the flow through a broker in exchange for a payment (instead of sending it directly to an exchange). We don't do that. We send the orders we represent directly to an exchange. The exchanges sponsor payment programs, which programs collect from market-makers and pay out a portion of the collected sum to the brokers. There are rules as to which orders and underlyings are eligible to participate in the program and what the collection/payout rates are. All these are at the discretion of each individual exchange. That is what you read about on our website. The initiator of this thread asked about the routing of non-marketable orders. IB generally routes such orders to the exchange with high liquidity. This most often is CBOE or ISE. I have asked that person to send me some details about the orders where he received the 10 cent price improvement. I myself would like to form a hypothesis as to how it happened. Hopefully, he will send me some.
Look. You got to my nerves. I read your f*king answers as well as the answer of others. You come here and try to defend something that should not be defended. You make money on the back of the customers in many ways: 1. Timber hill 2. Exchanges 3. Other market makers/etc You fill orders such that you maximize everything you can get after commission. There is worst! Even if it were acceptable to do the above, if you had two scenarios that maximize the IB side, there is nothing there that says let us optimize for the client even if IB loses nothing. So you come here and give us you shit about what is meant or not meant by some f*king words. You understood what the client said: he does not want to be sticked? What do not you understand. This is about money. You maximize what you can get, and you never think of the client. Period. The only thing that saves the client is the LIMIT price. Thanks god the limit price exists. When other brokers will come out and meet IB's commissions, you will see what will happen. People will desert you, and when that day comes you will pay back the client part of whatever you receive on his order, and beg them to stay. People have memories. They will never forget if someone took their money unjustly. Never come here and try to show people who take the risk and make experiments to prove what they say, and give them that sort of f*cking answer. I have had a long day, and i did not want to spend time reading and answering your shit.
The guy who posted is a man, and you come here and try to appear smart by try to lower him. You are an idiot. Get lost. A customer should pay Zero commission! That is right Zero commission! That day will come. In case you do not know, liquidity has a premium, and the retail customer may one day demand it. Kiwi-- What a name. Reminds me of NewZealand and Lambs. Do not be one of the lambs....I can't stand posts like these... and have to answer them...