I think his point is that AMEX can work both ways. If you are on the right side of a clearly awful opening AMEX print, you appreciate the AMEX routing. Otherwise you don't.
Reg NMS does not apply to orders executed in an opening cross. So this is no excuse for SMART to re-route open only orders to AMEX, where the customer wants to route elsewhere. Reg NMS does not apply to non-marketable limit orders. So this is no excuse for IB's failure to allow the customer to exclude AMEX from the routing of non-marketable limit orders. Reg NMS allows a broker to exclude any exchange which is not currently guaranteeing immediate automatic execution, for example, manual quotations from AMEX specialists. So there is no excuse for IB's failure to allow exclusion of AMEX at those times when AMEX fails to guarantee immediate auto-execution. Reg NMS allows a broker to route away from an exchange which is malfunctioning or which has a pattern of malfunctioning, so again, when those exceptions apply, IB has no excuse for failing to allow exclusion of AMEX. Reg NMS has many other exceptions. IB should allow the customer to exclude AMEX in the various situations where Reg NMS permits the broker to do so. I agree that Reg NMS will not permit the total exclusion of AMEX, but it does allow the exclusion of AMEX to the extent needed to avoid all of the problematic situations discussed in this thread - opening crosses, manual executions, specialist "stunts", malfunctions, etc. So IB should implement a way to exclude AMEX to the fullest extent permitted by Reg NMS. Let me reiterate my earlier postings: IB is not scheming to profit from bad order executions. IB sometimes makes less than optimal algorithm design decisions, for order routing, but this is an unintentional shortcoming. I don't think any other retail broker routes better than IB.
That would be nice, but I get the impression that the SMART development group is always busy and implementing a Reg NMS exclusion option would be difficult and increase their legal liability. It wouldn't surprise me if their legal dept said no way. I expect this option is permanently off the table. Now that NYSE has bought AMEX, perhaps they will move the products and give AMEX the quick death it deserves. I agree. IB is not scheming to gyp its customers. OTOH, as someone who never uses market orders outside of the crosses, especially with Reg NMS I am not convinced that SMART handles my orders any better than direct routing to the exchange of my choice. I can point to several blown orders courtesy of SMART. I can also point to some good fills, including one phenomenal fill $2 outside the day's range which I felt certain would be busted (and probably should have been). I haven't kept records, so I cannot tell for sure, but I suspect SMART has been a net loser for me. This is a tricky issue to evaluate since the bad results always make a much stronger impression than the good ones. Of course, the commission advantage to using SMART for unbundled commissions is so large it swamps whatever the net cost/benefit of SMART may have been in trade executions.
IB's job is to maximize return for it's shareholders... While giving it's Customers legal fills. They do this exceedingly well with HUGE profit margins > 50%. SMART is the absolute cornerstone of IB's business... And is not designed by programmers... But at the Vice President level of the firm. Since there is no actual definition of "best execution"... http://www.ici.org/funds/abt/faqs_best_execution.html And Reg NMS is pretty much meaningless... Most brokers can and do... Route orders to maximize their bottom line... much of the time. As a rough guess... You might typically get a truly "best execution" about 80% of the time... And get chiseled for a penny or even much more... about 20% of the time... (Based on my experience of doing about 100,000 trades/year). What you are arguing... Is that IB voluntarily creates a HUGE COMPETITIVE DISADVANTAGE for itself... Yet still continues to increase it's market share year after year. This is a fantasy. You should never use Market Orders... Use ONLY Pro Level Third Party quote data that also gives you a good NBBO quote... And read more articles like the following: http://www.tradersmagazine.com/issues/20_275/100123-1.html
Now that NYSE is buying AMEX, IB has no plans to fix this. They assume NYSE will kill AMEX. Perhaps they will, but meanwhile beware. I've seen these ETFs trade several hundred thousand shares before the low volume AMEX open.