Without knowing the market, I'll use HK as an example. Do you know that for HK stocks, each API is allocated 1 transaction per second. (that is NOT a typo). Each additional throttle costs 100K HKD (13K USD) up front + another 100 US per month + believe it or not, an additional cost of upgrading 2 phone lines. So, lets say a firm orders 10 transactions per second. That's and upfront cost of 130K USD + incremental costs each month. Now if one client is constantly updating (cancel/replace is two transactions), I think you can see how there is a great impact to the firm and the client is potentially costing the broker money as they slow down other clients. Hope this puts things more into perspective. On the HKFE, firms are allocated 5 TPS per API. You can order more (and we have) but for example some clients are running code that mimics the futures, it can create speed issues. Hope you get the picture. Now if you require that many updates I'd suggest you consider paying for your own dedicated API and all the costs associated with it. Some firms (and perhaps even IB) may consider that. Most exchanges have similar restrictions and brokers will need to make a business decision on how to deal with the issue.
Thanks for the explanation. Just out of curiosity, if you have a limit of 1 TPS with an exchange (based on your best judgement of what you expect) and suddenly you receive 60 transactions from different clients in one second, do you stagger the transactions over a one-minute period (potentially causing delayed trades?) to avoid incurring the excess charges? You certainly will not want to pay for 60 TPS just for the occasional surge in volume!
thanks, def. I hope IB and customer can resolve this in a way that can benefit both. 1) can IB provide a clear rule to let customer know the situation? I was suddenly informed my account will be freezed if the ratio not lowered. for example: CME message policy clearly states what is the limit and what is the penalty. they smartly use penalty instead of freezing user account so that they can benefit while discipline the customers. the customer feel the pain but can still trade/ make money. 2) can IB provide realtime ratio to customer? I used my own calculation today and guess it is not the same as IB's. I want to know how it is calculated so that I can get correct number and not violate the ratio rule. 3) Is the HK market the same as US emini future option? There is not as many people trade emini future option as trading stock and option. 4) Should IB identify which types of equity trading causing bottle neck(increase cost) instead of using general ratio rule combining all modification? for example, cme message policy used to distinguish ES, NQ, ER2 options with different ratio. IB should do the same. probably customer complain stock filled too slow but emini option has the high ratio. If IB impose ratio policy too much, customer cannot trade and IB cannot make money. IB has to balance this and the cost and find a solution. Exchange such CME should experience most of the bottle neck problems. Instead, they no longer impose the ratio rule because they know only when customer trade, they can make money. Nobody makes any money by Freezing customer accounts. Hope IB can find a better solution.
Actually, Getting rid of customers who don't fit your business model is one of the most sensible things a business can do. Other than (of course) getting "good" customers who do fit your business model.
If you order fill to change ratio is > 50:1... Then you are: (1) Incompetent. or (2) You are spoofing and manipulating the market. Either way... you are hurting real traders. F*ck off and die.
with all due respect it's a bs statement..there is a bunch of rules,related specifically to PRIORITIES of your order.. bottom line-just like in a department store-good deal did not last long..you have to be first in line to get those shares.get it? either we are speak in different languages or people, who agree on ratio restriction are those,who place one order per day..i'm not blame them,but we are just not on same boat.
Def-what about US stocks? specifically nasdaq, routed as "smart"? most of them routed to ISLAND anyway.are they complaining about it? it's ECN for C* sake.. we are already have pretty severe restrictions and fees related to orders, routed directly to certain exchanges..but this one is just too much imo.. for those,who talking about spoofers ot whatever you name them-once again-i track 100 stocks with open orders at certain levels on all of them and update some of my orders let say once in hour..some of them get filled, some of them not...there is a days,when i got no fills at all.. i'm spoofing something? is it really hurts my broker? electronic exchange? how? what about five digits commissions you are recieving from me? don't need it anymore? i doubt it..i feed at least two of you..think about it.. please,tell me..i'm all ears.. Thank you!
The broker may choose to have that allowable ratio as 20, 30, 40, 50, etc. according to its business model; but letting the customer know it policies beforehand is the key.
I really can't comment on markets outside of Asia as I don't know all the limitations. Regarding the point above, the ratio is also variable as there is a big difference between someone blasting 20 orders in at once or over short bursts and someone doing that over the course of a day.
Bob, It sounds like you're probably going to be given a free pass because you don't strain the systems. I doubt we want to force IB into a "this is the exact rules" mode ... it provides that certainty that people like but lacks the flexibility to meet peoples needs while protecting systems and cost structures. Any time you want to sort out the double margins on non-base currency forex pairs it would be good though def