IB Quits options game!

Their deep pockets only provide liquidity based on their global dispersion model. Basically they are not always making narrow two sided markets unless they can lay that off somewhere else. The model takes little or no risk.

 

They got tired of taking the other side of my trades and Losing!

 

Were they still MM in Hong Kong and Sydney option markets ?

 

LOL! I have to admit, that thought had crossed my mind too! I use IB as my broker, and if they have been acting as counterparty for a lot of my trades, they have been losing their ass

 

Well they are NOT supposed to have an edge. They are supposed to earn money based on providing brokerage services regardless whether we profit or lose, remember? Unless they want to refund us our commissions when we lose? And they are supposed to be making market in the illiquid ones to enhance liquidity, hence the term "making a market"? And they are supposed to be compensated by the risk that they take in making a market in illiquid options.

And how are the regulators ensuring and enforcing that all transactions are to go through a central exchange if they are all getting internalized by the brokers themselves? If all the brokers are just internalizing the orders against their clients, what's gonna happen to the central exchanges?

 

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if the model is nearly riskless why is Timber leaving it. is it generating negligible profits? if so why?

 

WHY can't they just have ONE or a few central exchanges like the stocks or futures? It's very confusing and highly inefficient with all those exchanges each having their own rules and order-taking mechanisms that really does not benefit anyone.

 

They make markets in almost every symbol across the multiple exchanges. They preference themselves when they route and if they are best market they are entitled to 40% of the order. If they are not best - best fills and if there is a balance matching best on another exchange would get it shipped unless someone matched on the initial trip.
Clearly it wasn't worth the capital anymore

 

I love these 'options' traders claiming they kicked TH's ass. When they have ZERO way to know what the outcome for the MM was when they trade against them .

 

If you are asking to me guess, they can't do enough volume at their values to get a good ROI. Just a guess.