IB 'Seek Price Improvement' option. Dark Pools?

Discussion in 'Order Execution' started by Daal, Aug 31, 2012.

  1. Daal

    Daal

    This option on the trade ticket says they will look for hidden liquidity, I assume they try to fill you in some dark pools, is this correct?
    If so which dark pools are these?
     
  2. 1245

    1245


    Not really.Timber hill is the trading arm of IB parent company. They are a large electronic trading desk that makes markets in options. If your order can be executed against their values, either single leg or complex order, they will trade all or part of the order with you. The advantange is that they might do better for you. The disadvantage is that no one sees that order until it executable.
     
  3. Daal

    Daal

    So this doesn't apply to stocks at all?Can anyone from IB confirm this?
     
  4. def

    def Interactive Brokers

    IB doesn't internalize. Actual clients who trade via IB can attest to the quality of their fills on both stocks and options.
     
  5. Daal

    Daal

    Its not about internalization, if they tried to get a better fill by sending the order around a few dark pools I would have no problem with that as a long the price improvement was decent(1 cent or more)
     
  6. IBsoft

    IBsoft Interactive Brokers

    It applies to stock. By default the stock smart router pings a few dark pools to get a fill. (The benefit is not only potential price-improvement, but also lower venue-fee). The few chosen ones are the ones that have the lowest latency and highest likelihood of a fill.

    If you chose the option you inquire about, the smart router will try all the dark pools we have access to before routing to an exchange.
     
  7. Daal

    Daal

    Since IB has a relationship with these dark pools is it possible to send passive non-marketable orders to these pools?
     
  8. 1245

    1245

    When will you recognize Timberhill as part of the firm even though they have their own Finra Broker ID?
     
  9. IBsoft

    IBsoft Interactive Brokers

    Our relationship is (for now) limited to liquidity-taking.

    Please note that our Smart router gives you some of the benefit you seek. If you post a non-marketable order (which we route to a venue) and IB then subsequently receives a liquidity-taking order for the same stock, we will cancel your order at the venue and cross the two orders within our platform. Hence, your order provides liquidity to IB customers.
     
  10. Does it matter if IB treats them blindly/equally with others?

    I think they claim that they do so.
     
    #10     Aug 31, 2012