The frustrating part is that if indeed it went to a broker, they never actually executed. They would base it on order size, so for example today every order for 10 contracts or more wouldn't appear on the exchange for sometimes several minutes. If I broke it into two 5 contract orders, they'd execute immediately, sometimes while my 10 contract order for at a price more likely to be filled, i.e. closer to the ask for a buy was still sitting there. If I put the identical order on OptionsXpress it would execute, all while the 10 contract "broker" order just sat. It was especially frustrating on SPX because there are wide published spreads (at least on spreads I trade) but you can almost always trade $.05 off the mid. As long as your order makes it to the market so someone can hit it. With this IB "broker" thing it never made it to the market, so it didn't get filled until the "broker" gave up. It's hard to believe it's legal to do that, but apparently they get away with it.
SIG, It is very frustrating. That is one reason why we offer, for larger accounts, access to a floor broker. Our larger clients can call or IM the broker on the floor and give them the order and get feedback very quickly from the crowd, or enter their order electronically to the Hybrid 3.0 system. Using the broker of course has an added cost, but with SPX and VIX some are willing to pay that for the added service and having a professional actively look for liquidity for them. It's a little old school, but it works well having the choice. Bob
I am curious if in your experience floor brokers can add value in complex order book orders like simple vertical spreads? For SPX the cob bid/ask is always much better than the synthetic you'd get by legging in the underlying options at their mids. I'm curious if a floor broker can find a match for that kind of thing or if it's too complicated to keep those all in your head as the broker?
I came from the trading floor, AMEX. I never worked on the CBOE or ever traded in the crowd. I can't make any guarantee about which is better. I expect that the larger the order and the less liquid that strike is, the more value they add, but I have no proof. I think it's nice to have the ability to pay for "color" from the crowd and have them "shop" your order on their IM blast or over the phone. When I was on the AMEX, I was on the other side of the IM blasts and traded with brokers that way. Keep in mind that few trader view the complex order book. You will often trade with a MM that finds value in your order electronically from their values from what I call an "electronic eye" vs another customer that happens to what to do the opposite of what you want, or anyone that sees your order. By shopping your order, they can find on floor and off floor traders willing to play at some price, maybe no your price. I don't have a current client that uses them. At my old firm, my firm did. They did a lot of volume through them and were very happy. Most of that volume was credit spreads is SPX or any spread in VIX.
Unless you are trading huge size, I would say no. The actual bid/ask spread in the COB is really very tight. Although you won't know exactly what it is except by walking up or down your spread. You will also get an instant fill on your order if it is placed in the COB and is marketable. If the spread is routed to the broker instead of the COB, here is the process of getting filled. First it will show up on his/her broker workstation in the pit. He will then have to acknowledge it, which could take some time depending on what else he is doing. He will then yell out the spread to the traders around him. This will generally only be heard by the people around him. If they don't want it, it will then stay on his workstation or he can manually put it in the COB. The COB is looked at by many more traders/market makers, etc. Now if it is a large sized order he will shop it around and you may well get a better fill on it, but it would have to be very large in my opinion. Note that this only applies to the regular monthly expiration of the SPX. If it is a weekly option it will almost always be routed through the COB. This is one of the reasons I stopped trading through a Jbo and switched to a customer account. A jbo's orders are sent to a broker in the SPX monthlies, both spreads and regular orders. I found it almost impossible to trade the SPX this way.