IB questions

Forgive my stupidity but as a futures trader with IB what are the effects on me and my trading with IB?

 

Forgive my stupidity but as a futures trader with IB
what are the effects on me and my trading with IB?

Not sure that it does, Larry. Sounds like they were fined for record keeping. A combination of inexperience from the auditing staff for NASD proceedures: a programming error (the programmer didn't know the rules) and the person that did, didn't verify the process. I don't think they were trying to skirt the issue.

So they pay the fine and make the changes and back to business.

But you might want to verify that with IB yourself.

 

the IB press release in relation to the fine:

Press Statement Regarding Interactive Brokers’
Resolution of NASDR Inquiry

On March 8, 2002, Interactive Brokers (“IB”) entered into a settlement to resolve an inquiry by NASD Regulation, Inc. (“NASDR”) regarding the electronic format of orders sent by IB to electronic communication networks (“ECNs”) via the SelectNet system; the electronic format of Order Audit Trail (“OATS”) reports and the retention thereof; and IB’s related supervisory practices. Specifically, NASDR found that IB violated an NASD rule concerning the use of the Nasdaq SelectNet system by electronically sending orders with an “N” (or “non-negotiable”) modifier in accessing ECNs (in cases where IB did not route orders directly to the ECNs). NASDR also found that IB provided 24-character hexadecimal order identification numbers in its OATS reports rather than an 8-character alphanumeric identifier as required by the OATS rules; found that IB failed to retain for a sufficient period of time certain electronic information created by IB as a software debugging record; and found deficiencies in IB’s supervision of these aspects of the firm’s operations. IB cooperated with NASDR staff during the investigation and is pleased that it was able to resolve the NASDR inquiry on satisfactory terms. Under the terms of the settlement, IB did not admit or deny NASDR findings that the firm failed to comply with NASD regulations, but agreed, among other things, to make certain changes in its systems based on NASDR findings.

IB is committed to providing to its customers the highest quality electronic trading systems available to market participants anywhere. We are continuously working to update and improve our systems to maintain our preeminence in high-speed execution and straight-through clearing services.

 

IB has been a driving force in lowering fees in the retail brokerage business. I guess that translates into ruffled feathers.

If you can't compete in the marketplace turn your legal and regulatory dogs loose. Given the stuff that goes down each day on wall street, is that all they could come up with? Sounds hyper-technical to me.

Are these the same heroes who were able to nail
the really big guys, like 15 year old Jonathan Lebed, but missed an (identical in theory) $1 trillion dollar scam by Merrill Lynch and the boys?

I guess its the way American justice plays out.
Some get off for murder and others get busted for having dandelions growing in their lawn.

 

The way odd-lot (and odd-lot portion of mixed-lot) orders are handled depends on where the order is routed.

Instinet and REDIBook effectively maintain separate odd-lot and round-lot books, providing protection against odd-lot fills for round-lot orders. This is why you will often see a market on REDIBook where there is an odd-lot bid above the inside offer. So, if your marketable mixed-lot order gets routed to REDIBook, you may get an immediate execution for the round-lot portion of the order, with the odd-lot balance remaining posted as a bid on the book until it crosses the market by enough for someone to be willing to take it out.

Island and ARCA offer no such protection, and fills should occur in price/time priority.

My experience above is related to listed stocks during the pre-market and after-hours sessions. I'm not sure how NASDAQ/RTH order-handling rules affect this issue.

I think NYSE is supposed to execute odd lots without disadvantage compared to round lots, which is part of the reasoning at the core of the restrictions on how odd-lot orders may be entered on Direct+.